How To Predict Real Estate Prices – Get Rich Education Podcast

Get Rich Education: How To Predict Real Estate Prices

CLICK HERE to listen to the latest recording “How to Predict Real Estate Prices” with professional investor David Campbell and Keith Weinhold host of the Get Rich Education podcast.

Get Rich Education is a weekly podcast with an abundance mentality to create wealth through real estate investing for an outcome of lifestyle improvement. Robert Kiyosaki has appeared as a guest on the show. His Rich Dad Advisors and Hassle-Free Cashflow Investing’s David Campbell are regular contributors.

The show appears on iHeart Radio, iTunes, Android, and dozens of platforms.

Want to learn How To Predict Real Estate Prices ? Well, CLICK HERE to listen in.

How to Predict Real Estate Prices – PREI Podcast

How to Predict Real Estate Prices

CLICK HERE to Listen in to the Passive Real Estate Investing Podcast episode 43 with host Marco Santarelli and featured guest David Campbell – founder of Hassle-Free Cashflow Investing – as they talk about how to predict real estate prices! If you can see where a market has been, and where it may be headed, you can lower your risk and improve your investing results. Learn to predict property values, price trends, market drivers, inflation, currency and other important factors that savvy investors should be aware of.

Should I Buy In Today’s Seller’s Market?

Many of the local real estate markets in America are in a Seller’s market. If you want to determine if your real estate market of choice is a Buyer’s or Seller’s market CLICK HERE to read one of my most popular blog articles: “How to Predict Real Estate Prices”

I get this question a lot: “Should I Buy A Home In Today’s Seller’s Market?”

This is easy to answer from a purely theoretical perspective: NO!

Buy during buyer’s markets.
Sell during seller’s markets.
In between market cycles have your money invested in well-secured income-producing bonds like mortgage notes.

(Disclosure: Yes, I sell mortgage notes and I hope you buy lots of mortgage notes from my company. However, I hope you can read past this author bias because there are a lot of good lessons to glean from this article. Shameless plug: CLICK HERE to gain access to our current inventory of Hassle-Free Cashflow Mortgage Notes producing 10% annualized ROI.)

When I look at the vast number of buyers in today’s real estate market, I want to shout “WHERE WERE YOU FIVE YEARS AGO?” when it was the best buyer’s market of our lifetimes. You see it always happens this way… Smart investors buy when everyone is selling. When everyone is buying, dumb money rushes in and smart money sells. I’m not saying don’t buy right now. I’m saying BE SMART about buying. If you can still borrow at 5% and buy a property producing a +6% return… well, that sounds pretty smart to me. You see, even though real estate prices are relatively high right now compared to rents, money is still cheap (as a result of an abundance of Federal government stimulus). Interest rates are low which means it is a buyer’s market of debt. Smart investors are still borrowing all the money they can get their hands on at long term fixed interest rates. What do you do with that cheap money after you borrow it… well, BE SMART and make sure you are “positively arbitraged”.

If you aren’t really, really, really sure what “positive arbitrage” means, you must absolutely watch this free video series as soon as you’re doing reading this article: CLICK HERE

After you’re done with the above video series watch this free video training series on real estate investing math.
CLICK HERE

These two sets of free investor training videos could make you rich, or at the very least they could save you from making some very poor financial decisions.

OK class… everyone turn to your neighbor on the right and explain “positive arbitrage”. Getting the positive arbitrage formula right (CAP > interest rate) is the razor’s edge difference between financial freedom and bankruptcy. Positive arbitrage is the most important real estate lesson there is. Unfortunately, very few people teach it. If you don’t understand positive arbitrage well enough to teach it, please promise you will watch the above videos and not just gloss over this point.

The question “Should I Buy A Home In Today’s Seller’s Market?” is harder to answer from an owner occupant perspective because a primary residence is both a consumable item for pleasure and utility as well as a major financial investment.

As long as it is cheaper to rent than own, you are financially ahead to be a renter and go buy rental property in parts of the US where it is cheaper to own than rent (CLUE: this is why so many California investors are currently buying rental houses in Texas). When real estate prices are at a market cycle low, it could make financial sense to buy a primary residence even if the cost to own is higher than rent if you choose to speculate that when real estate prices return to market cycle norms you will make a bunch of equity that would be significantly greater than the cash flow “losses” you experienced from paying more to own than rent. The caveat of this formula is that once the market cycle booms, you need to sell your house, reinvest the equity, and go back to renting. In lieu of selling and going back to renting, some savvy property owners choose to harvest their market equity gains through a cash out refinance and reinvest the capital elsewhere. That is an excellent strategy as long as you have the positive arbitrage formula right (CAP > interest rate).

Of course, many times the decision to buy a primary residence is made on emotions rather than finances alone and that’s OK too. Ultimately, the money you earn is designed to bring you the things you want when you want them. So, if you can afford a house and you really want to own it, then market economics be damned! A house to live in is really a liability (not an asset) anyway. If you like the convenience of paying retail prices to get what you want when you want it, then who cares what part of the market cycle we’re in. A retail buyer will buy something because they want it and can afford it and that’s OK! I pay retail prices for food all the time. I know it is cheaper eating at home than eating out, but eating at a fine restaurant can be really, really fun. Sometimes it’s OK to pay retail prices for stuff you want when you want it. Just make sure you know you’re doing it on purpose. Dumb money buys the things they want because they want them and then justifies the expense as an investment. Expenses are fine; just realize that expenses and investments are very different things.

If it is cheaper to rent than own and you’re trying to make a financially intelligent decision, go find a rental situation you are happy in and use your cash to invest where the numbers make sense. If it is cheaper to rent than own and the house you want to buy is relatively fungible (e.g. not a unique one of a kind property that comes on the market once in a generation) then I would wait until the next buyer’s market to buy a house to live in. When the next buyer’s market comes along, it will be obvious to you and every one else because the words “foreclosure” and “short sale” will be on the evening news like it was 2009-2011 all over again.

If you have assets in the stock market, I would apply similar advice to the above. IMHO stocks are in a bubble. A few months ago, I published a prognosis to my newsletter subscribers that the stock market was at a top and ready to crash. The DJIA was 18,100 when I made that announcement. As you know, the market is currently down significantly from that point. Two weeks ago, I published to my subscribers that there is a lot more downward movement coming in the stock market. Today’s DJIA closed at 16,384… that’s a ~10% decline from the market peak just a few months. After reading my prognosis, a few of my investor clients cashed out of the stock market (at the top) and used their cash to buy well secured mortgage notes paying 10% interest. These clients achieved an ROI well over 20% annualized relative to where they would have been if they had left their assets in the stock market. Protecting yourself from loss is almost as good as earning a profit.
mortgage note to stock comparison chart

Of course, no one knows for sure where the market is headed so use your own judgement where things are going and how to prepare accordingly. Personally, I’m selling real estate in areas where I see a price bubble and moving this equity into income producing mortgage notes, farmland, and silver bullion. I am also still bullish on the Dallas-Fort Worth metro for acquiring income-producing, positively-arbitraged rental houses. If you can still borrow money cheaply and you’re looking to build long term equity and tax shelter, I would not be afraid of taking a long term investment position in the DFW rental housing market (HINT: CAP > interest rate). If you’re looking for investment opportunities in income producing Hassle-Free Cashflow Mortgage Notes or Dallas-Fort Worth (DFW) rental property, I am here to help you. Always remember, I offer a free 30 minute investment strategy consultation over the phone to help you navigate the potentially turbulent economic waters ahead.

CLICK HERE to schedule your no-cost investment strategy consultation with professional investor David Campbell
Best regards,

David Campbell
Real Estate Investing Strategist
866-931-9149 x1

If you’re thinking of making an investment in a Seller’s market, read this first…

We are living through interesting times. If you’re thinking about investing in real estate (or anything for that matter) in a Seller’s market, it’s essential to change your investing strategy to respond to different investment cycles.

Amateur investors learn an investing trick that worked once and try using that same trick over and over in all market cycles. That’s like planting corn in your garden every single month of the year. Some months you’ll have a bumper crop and other months you’ll wonder why there is no corn growing in your frost-covered garden. Your mutual fund sales person will call that dollar cost averaging; I call it silly.

There are times for buying and there are times for selling and times for just holding on. Having invested through the last real estate cycle of boom and bust and boom again, I am currently investing a lot more conservatively than I was in 2003-2007. Although real estate is local and there will always be good deals to be found, in today’s market good deals are definitely getting harder and harder to find. That’s because we are in a Seller’s market. In a Seller’s market, amateur investors overpay for properties because they don’t see any other alternative.

Investing 101 – buy as much as you can during a BUYER’S market. My home building company was very aggressive about purchasing heavily discounted vacant lots during the down market. Now that the housing market is booming, we are building houses with the help of contractors like Ideal Construction LLC and selling more houses than ever.

Vacant lot prices have quadrupled from the market bottom making it extraordinarily difficult to find vacant lots to replenish our inventory for future development.

Investing 202 – don’t overpay for assets during a SELLER’S market. Most home builders are currently ‘overpaying’ for the small supply of lots on the market, because they only know one trick – building houses. They have to pay the high market prices for lots because that is the raw ingredient that makes their business run. Many home builders will ‘overpay’ for lots even if that means their profit margins virtually disappear. Because they only know one trick, it means ‘overpay’ for their raw ingredient of lots or go out of business because they have no more lots to develop.

If you’re thinking about buying real estate in a Seller’s market, think long and hard about that decision. Although I don’t think we are at the peak of the current real estate or stock uptrend, I do think we are currently well above where the next market bottom will be for both real estate and stocks. Of course, if you’re buying real estate for long term cashflow and positive arbitrage, it could still make sense to buy today because interest rates are still incredibly low. You could say that real estate is in a Seller’s market, but interest rates are still in a Buyer’s market. If you are buying ‘over priced’ real estate with ‘under priced’ financing and you are positively arbitraged you hold on for a very long time, you’ll probably do very well. (Positive arbitrage is when your CAP rate exceeds your interest rate)

Investing 303 – When equities are overpriced, sell equities and buy bonds. In most of today’s US real estate markets, real estate is now overpriced. Click here to read my blog article “How To Predict Real Estate Prices” to determine whether your real estate market is currently under or over priced. DON’T MISS THIS PROFESSIONAL INVESTOR HINT: I am currently selling most of my real estate portfolio, using the cash to buy mortgage notes, and will sit on the sideline collecting mortgage interest until the equity market / home prices crash. I plan to buy back into the real estate market at the next cycle low. I am currently buying precious metals as their price continues to drop, as well as farmland and timberland as an ultra-conservative hedge against hyper-inflation and a potential currency collapse. Market cycles are very long. It can be a decade or more from market bottom to market top and back down again. Amateur investors do not think far enough into the future. They plant corn seeds in summer expecting to harvest their corn crop in the middle of winter. Sometimes it just makes common sense to stop planting and wait for the proper season for planting to come along.

Investing 404 – Not all bonds are created equal. Mortgage notes are my personal choice of bonds. The only thing I own in my IRA is mortgage notes. A mortgage note (bond) is a promise to pay secured by a piece of real estate. If the borrower pays me as agreed, I am happy because I have earned a 10% interest rate with no tenants, no toilets, and no vacancy. If my borrower pays late I earn late fees in addition to mortgage interest and my ROI goes even higher. If I buy a corporate or government bond and they don’t pay, I can pretty much write off that investment as a total loss. If I buy a real estate mortgage note (bond) and the borrower doesn’t pay as agreed, I will do the happy dance of joy because I get to foreclose upon the real estate for pennies on the dollar. By restricting my original loan amount to 75% of the property value, I should make a higher return on my money by foreclosing on the borrower’s equity rather than getting paid as agreed. That’s what I call a win-win! If the price of real estate drops and I have to foreclose, I at least have the borrower’s 25% down payment equity as protection from loss. I also have title insurance to help protect my investment from fraud and/or sloppy paperwork.

I am currently focused on buying income producing mortgage notes in Dallas, Fort Worth, and San Antonio Texas. These three cities have excellent population growth, economic diversity, very affordable and stable housing prices, and the foreclosure laws are extremely favorable to lenders. I’ve been buying and brokering mortgage notes in those cities for about five years and I’ve developed an extremely strong system in the process.

Using the strength of my investor network (the same network that brought you to be reading this blog post today), I have developed a steady supply of mortgage note investment opportunities. I promise you won’t find mortgage note investments like these anywhere else, because these notes are specifically created by my team to fit my personal investment philosophy.

All of our mortgage notes:

(1) are in the foreclosure friendly state of Texas and the rapidly growing markets of Dallas, Fort Worth, and San Antonio.

(2) are secured by recently renovated, highly affordable, single family homes in class B neighborhoods near major employment centers.

(3) have strong borrowers with less than 45% debt to income ratio.

(4) are 1st position deeds of trust at ~75% loan to value.

(5) have mortgage payment comparable to the cost of renting the same property. If it is the same monthly payment to rent or own, the borrower has little economic incentive to default. If you do foreclose on a non-performing note, you can resell the property for cash or rent out the foreclosed property and generate about the same net operating income as you were getting from your note.

(6) are supported by a conditional buy back guarantee from Hassle-Free Cashflow Investing giving our investors peace of mind and a secondary source of repayment for their mortgage investment.

(7) are professionally serviced by a licensed and bonded mortgage servicing company.

(8) are self-directed IRA friendly. Our team can handle all of the compliance paperwork for you.

(9) are turnkey and hassle-free.

(10) have lender title insurance in place issued by Chicago Title Company and paid for by the borrower.

(11) have zero investor closing costs associated with the purchase price.

(12) are able to be purchased at a nominal discount below the face value of the note – usually about 99 cents on the dollar and the 10% annualized ROI would be improved if the borrower paid their note off early.

(13) have complete due diligence files available on the property, the loan, and borrower.

(14) are professionally underwritten by a licensed and insured residential mortgage loan originator (RLMO) to be “Frank Dodd compliant”.

(15) are secured by houses who have a minimum value of $75,000.

(16) are fully amortized over 15 years but can be resold for the amount of the unpaid balance at any time.

(17) have a bite sized purchase price between $60,000 – $120,000

If you would like to purchase high-yielding real estate notes secured by 1st position deeds of trust recorded against quality real estate in Dallas-Fort Worth, TX send us an email – David@HassleFreeCashflowInvesting.com or call 866-931-9149 ext 1

To request general information about mortgage note investing, you can read my free white paper – “CLICK HERE for Secrets of Hassle-Free Cashflow Lending” as well as watch this video “CLICK HERE for Investing and Tax Strategies for Mortgage Note Investors” and this video “CLICK HERE for Nuts and Bolts of Being a Private Lender.”

How To Predict Real Estate Prices

Want to know how to predict real estate prices ?

Every investor wants to know how to predict real estate prices and the process is not as mysterious as it may appear

While I focus on investing for cash flow, loan amortization, and tax benefits, I also appreciate the warm and fuzzy feeling you get as a investor when your real estate values climb! So, what are the things I look for when figuring out how to predict real estate prices?
Prices are a result of supply, demand, AND capacity to pay.

Let’s look at these factors one at a time:

Demand for real estate is driven by population growth which is fueled by job growth. In resort and retirement communities, you might see high demand and price growth even when the local job market is stagnant because the money to fund real estate purchases in resort areas was earned somewhere else and imported.

Real estate supply is restricted by (1) availability of land, (2) geographic boundaries such as water and mountains, (3) political boundaries such as permit fees, restricted density policies, and (4) economic boundaries such as availability of development capital and the ability to build and sell new properties at a profit.

No matter how desirable or limited in supply something is, the price of the thing will be dictated by how many people can afford to buy it. Affluent communities have more expensive restaurants than the poor communities. Although the desire for food and supply of food to both of these neighborhoods might be the same, the prices in these two neighborhoods can be wildly different based on capacity to pay. For example a can of Coke could be $1 in a poor neighborhood and $3 in an affluent neighborhood. The main thing driving price differences in this illustration is capacity to pay.

Last week,my five year old son and I made blueberry muffins together. When they were done he proudly exclaimed, “Come buy blueberry muffins! Only THIRTY DOLLARS each!!!” I asked him why his muffins were so expensive. Without hesitating he said, “Because people around here have a lot of money!” Even at five years old, he’s paying attention to his dad’s lessons on economics!

As a real estate investor, I am attracted to affordable housing markets because it means the price of housing has the ability to increase in price. Just because something is affordable doesn’t mean it will go up in price, it just means it can go up in price. For prices to rise, the other variables of supply and demand must also be working in your favor. However, if something is unaffordable for the majority of people who want to buy it, that’s a pretty strong indicator that the price could be in a bubble and may soon come down to more affordable levels.

The ratio between median income and median home price is an effective way to gauge the affordability of housing in a particular market.

Median Home Price / Median Income = Affordability Ratio

Using data from Q3 2013, the San Francisco – Oakland MSA has a median home price of $705,000 and a median income of $76,300. That means the median home price is 9.2 times higher than the median income; it would require 9.2 years of median income to buy a median priced house. In terms of a monthly housing payment (Principal, Interest, Taxes, Insurance, and HOA dues), a median home in the San Francisco-Oakland MSA requires ~70% of the median income. That’s not sustainable. Either income must go up or housing prices must come down. I would bet on the former.
In Rockford, Illinois, the median home price is $88,900 and the median income is $51,500 which means the median home price is 1.7 times higher than the median income. To put it in other terms, residents of Rockford use a mere 13% of their household income for housing. WOW, that’s affordable!

Lenders don’t know how to predict real estate prices, but they know how to predict what borrowers are likely to pay and which are not. Lenders know that when you use a lower percentage of your income for housing, their loans are less likely to go into default. For example, FHA requires its borrowers to use no more than 31% of their gross income for housing and no more than 43% of their income for total debt service including housing and other loans. It seems pretty crazy for someone in California to use 70% of their income for housing!

I’ve traveled to both San Francisco and Rockford and I can tell you without hesitation there is more demand and less supply of housing in San Francisco, CA than Rockford, IL.

If you want to know how to predict real estate prices, there is a great equalizer in this supply and demand equation. CAPACITY TO PAY. Someone earning the median income and living on their parents’ couch in Rockford can save up all their pennies for 1.7 years and pay cash for a median level home in Rockford. Now, I’m not saying run out and buy real estate in Rockford because it’s amazingly affordable. (Remember, if you want to know how to predict real estate prices you also need the combination of supply and demand to create upward price movement.) However, I am saying San Francisco-Oakland prices are back into bubble territory and are poised for a downward price correction. If you’re thinking of buying a home in the San Francisco Bay Area because you think home prices will continue to go up, just ask yourself “Who can afford to pay more than 70% of their gross income to buy this house?” That’s right: NO ONE!

A housing price to income ratio less than 3 is very affordable, from 3 to 4 is moderately affordable, 4 to 5 is moderately unaffordable, and over 5 is severely unaffordable. Here’s an example of these ratios based on a $100,000 house whose PITI is $7500/year and using variable median incomes to illustrate my point.

If the median home price is more than five times the median income, those buyers will be required to use too much of their income for housing and will not qualify for mortgages. This affordability ratio can be comfortably higher in resort and second home areas because the income is imported from outside the metro where the property is located. However, if you are looking for rental property in a typical metro, properties with affordability ratios over 5 are overvalued based on the measure of capacity to pay.

One of the things I notice on this list is that the major metros in Texas rank remarkably well in terms of affordability: Austin 3.7, San Antonio 3.3, Houston 3.3, Dallas-Fort Worth 3.1 This healthy price to income affordability ratio is one of the things driving employers to bring jobs and people to Texas. The population of the DFW metro is booming and that is why I am focused on building affordable new homes and owning affordable rental properties in that metro. Let me know if you’d like to add some affordable Texas real estate to your portfolio as I would be happy to help.

CLICK HERE FOR A LIST OF OUR CURRENT INVESTMENT PROPERTY INVENTORY

If you would like to improve your odds knowing how to predict real estate prices, look for these three indicators of success: increasing demand (jobs), limited supply, and an affordability ratio below 5. Click this link if you want to use these criteria to see how to predict real estate prices in Dallas Texas.

  To your success,

David Campbell – professional investor / founder of Hassle-Free Cashflow Investing

866-931-9149 ext 1

Real Estate Investor Lessons From The US Postage Stamp

Eleven Real Estate Investor Lessons You Can Learn From The US Postage Stamp
by professional investor David Campbell

real estate investor lessons from the US postage stamp On Monday January 26th, 2014 the price of a first class stamp in the US will be going up 6.5%, from $0.46 to $0.49. No one is really surprised by this, so where’s the lesson and how can it help you be a more successful real estate investor?

Lesson 1: Utility – The utility of a stamp on Monday will be exactly the same as the utility of a stamp today. The VALUE or UTILITY of the stamp is the benefits that the stamp provides. Regardless of the price, the UTILITY of the stamp will remain the same; what really happened is that the utility or value of your CURRENCY went down. On Monday, it will take more dollars to buy the same amount of stamp utility you can buy today.

In real estate investor terms, the utility of a single family home is its ability to provide shelter. Over a thirty year period the utility of a four bedroom two bath home stays exactly the same. On day one, the house will provide the same amount of shelter it will in thirty years.

Lesson 2: It’s Not a Secret – The post office announced this price change on September 25, 2013. They gave you plenty of warning that the utility of your currency was about to go down by 6.5%. That’s a lot!!!

The Federal Reserve Bank, which has a substantial control over the utility of your currency (meaning the amount of stuff your dollar will buy), also announced in a press release on December 18, 2013 that “Inflation has been running below the Committee’s longer-run objective… of 2 percent.” You can insert your political opinion here regarding whether inflation is really running below 2% or not, but the point is nobody is keeping inflation a secret. The post office told you the utility of their service was going to stay the same but prices were going up. The Federal Reserve is giving you fair warning that the utility of your currency is going down by (at least) 2% a year if they can do anything about it.

As a real estate investor, inflation makes it relatively easy and predictable to find properties that will make me money over the long term. I want to find a property that will preserve its utility over a long period of time, will be a hassle-free ownership experience for me, and cashflow along the way especially when inflation pushes up the rent. In my world as a real estate investor that means owning new or like new properties with professional management, in landlord friendly states, and purchased with creative deal structures that allow me to cashflow with as little money down as possible.

Lesson 3: Leverage – Let’s say you go out on Sunday and buy 10,000 postage stamps using all of the cash you have on hand. You’d be out of pocket $4,600. You could theoretically sell those stamps in less than 30 days to your short sighted friends and family who didn’t know the price of stamps were going up to $0.49 or who didn’t prepare and take action like you did. Maybe you sell them at a slight discounted price of $0.48 so you have a value proposition to offer. Your 1,000 stamps would sell for $4,800 in 30 days – a 4% profit in 30 days or a 48% annualized yield. That’s a pretty astounding return for such a simple investment, but at the end of the day you only made $200; not a lot of profit for the effort involved. Let’s take this exercise a step further… So you have an AMEX card with a $23,000 limit on it and you have $4600 in cash so you go buy 60,000 postage stamps at $0.46 for a total investment of $27,600 (OK they probably don’t have that many in stock, but just hang in there for the lesson). You have $4600 of your own cash invested and $23,000 of credit invested. That’s A LOT of stamps, so let’s say it takes you 60 days to sell all of those stamps and you wind up paying 18% annualized interest to AMEX for the privilege of borrowing the money for 2 months. At the end of 2 months your profit loss would look like this: 60,000 stamps sold at a discounted price of $0.48 = $28,800 less your initial investment of $27,600 less credit card interest of $690 equals a total profit of $510 divided by your initial cash investment of $4600 annualized equals a 67% annualized rate of return. The unleveraged version of this investment produced a 48% annualized yield and the leveraged version produced a 67% annualized yield. The takeaway is that the leveraged version of this deal produced both a larger gross profit and a larger annualized yield even when the interest rate was high because the investment yield was higher than the borrowing cost. I love real estate because there is an amazing amount of leverage available to a real estate investor. What other asset class can you borrow 75-95% of the purchase price and still produce positive cashflow after debt service?

Lesson 4: Scalability – In the above example, you made $510 of profit and there was virtually no risk involved. So you say “WOW, that is a genius business model, David. I’m ready to hop in the car and go buy stamps right now! I actually have $100,000 of investment capital available so let me run out and buy 217,391 stamps and I’ll make $20,000 on this flip.” The problem with this massive postage stamp flip is scalability. If you have a two cent profit per item, you need to sell A LOT of items to make any money and find a big enough market to absorb the item you are selling. One the best parts about being a real estate investor is that it is very scalable. If you make a 5% profit on a million dollar property, we’re talking about $50,000 and that is serious money! Even better, if you bought your million dollar property with only 5% down and your property goes up in price by 5% you’ve actually doubled your money.

Lesson 5: Historical Perspective – The price of a postage stamp was $0.10 when I was born in 1975, $0.29 when I graduated from high school in 1993, $0.32 when I graduated college in 1997, $0.42 when my first son was born in 2009, $0.46 today and $0.49 on Monday. The day I was born in 1975, someone could have purchased a decent home in the US for 400,000 ten cent postage stamps (or $40,000). Purchasing this same amount of “house utility” still costs 400,000 postage stamps in 2014, but the price of a stamp moved from $0.10 to $0.49 and the price of a decent home moved from $40,000 to $196,000. Even though the price of the home and the stamp have increased almost 500% in the past 38 years, the utility or value of both of these things remained the same.

Lesson 6: Making Money With Debt – Imagine buying a $40,000 house in 1975 using 100% financing and interest only payments. That means $40,000 loan with no principal payments would have the same loan balance in 2014 as it did in 1975. On the date you purchased the home the loan was worth 400,000 postage stamps and the home was also worth 400,000 postage stamps. If you sold this house in 2014, you would be able to sell it for … ta da! 400,000 postage stamps. The way you make money with this formula is that it only takes 61,224 postage stamps to repay the $40,000 mortgage in 2014 and you would receive the equivalent of 238,776 postage stamps as your profit. You started with zero postage stamps invested (remember 100% financing) and 38 years later you have 238,776 postage stamps, or $156,000, to show for your profit. Remember, the utility or value of the house did not change;he utility of the currency decreased as the government printed more of it. As the currency devalues, borrowers of good debt are making a profit. As a real estate investor, how much good debt would you like to control?

Lesson 7: What This Means For You As A Real Estate Investor – I’ll keep it as simple as I can: Buy real estate whose intrinsic value will remain the same or decrease very little over time. Finance that real estate with as much positively leveraged debt as you can while still maintaining neutral or positive cashflow. Wait two or three decades and the value of our currency and the value of the debt will both decrease in value. Pay off your debt with devalued currency and you will have lots of postage stamps… ahem… I mean dollars left over to show for your foresight. (Positive leverage means the CAP rate of the asset you purchased is higher than the interest rate used to purchase that asset. Positive leverage is an essential fundamental of the Hassle-Free Cashflow real estate investor philosophy.)

Lesson 8: If It’s That Simple Why Doesn’t Everyone Do It? – The price of postage stamps is going up 6.5% tomorrow. How many people are running to the store today to stock up on stamps? Not many, and that’s exactly my point. People know currency devaluation is happening and the majority of people aren’t doing anything to prepare for it. The post office and the Federal Reserve are both telling you your currency will continue to devalue. Now that you know what’s happening, what are you doing to not only protect yourself from inflation but to profit from it?

Lesson 9: Banks Love Inflation Too – Banks don’t lend their own money. They lend other people’s money. They collect deposits and then leverage those deposits by borrowing from other banks. They pay less than 2% interest on those deposits and loans and then they lend it out to other people for 4% or higher. The bank makes a spread on other people’s money. The bank doesn’t care if the currency is devaluing because the currency doesn’t belong to the bank; it belongs to their depositors. As the currency devalues, the prices of the assets securing the bank’s loans go up and the loan to value improves thus making the bank’s job easier to foreclose if needed. If you are a real estate investor paying attention, you should be asking “How do I get to be the bank?”

Lesson 10: The Big Take Aways – I hope you enjoy my real estate investor newsletter and the tons and tons of free real estate investor education and investment opportunities you can find on my blog. Our team at www.HassleFreeCashflowInvesting.com can help you buy positive cashflow rental houses with as little as a 5% downpayment using our proprietary real estate investor financing programs. We can help you BE THE BANK. If you could borrow money at 5% and invest it at 6% or more, how much money would you like to borrow? We can help you acquire brand new rental houses in the hottest rental market in the country (Dallas – Fort Worth Texas) that will cashflow with as little as 5% down. The more positively leveraged money you borrow the more property you control. The more property and good debt you control, the happier you will be when currency devaluation occurs. Remember, your property doesn’t have to go up in value to make a fortune; it only has to go up in price as a result of currency devaluation.

Lesson 11: How To Be The Bank – AMAZING MONEY MAKING BONUS -What if I were willing to loan you $60,000 at 5% interest and then borrow $60,000 back from you at 10% interest using my loan to you as collateral? You’d make a 5% profit ($3,000 a year) on the money I loaned to you and you’d have absolutely zero risk because if I defaulted on my loan to you, you would just tear up the note that you owe to me and we’d be even. That seems crazy so why would anyone in their right mind do this? There’s a perfectly logical reason, but if you want to find out that reason you’ll have to schedule a brief phone phone call with me! https://my.timedriver.com/WBYTQ There are always a few strings attached so let’s get them out in the open so we aren’t wasting each other’s time on a phone call talking about a real estate investor opportunity you aren’t qualified for. To qualify for this insanely simple and safe program you need to meet the following criteria:

(1) have a minimum credit score of 680 if you are a US citizen or an equivalent amount of strong credit if you are not a US citizen,

(2) you have a healthy job history and debt to income ratio which allows you to qualify for a conventional loan (if you have 10+ financed properties we can still help you),

(3) you can show a conventional lender a minimum of $40,000 in cash reserves ($80,000 if you are not a US citizen),

(4) you have a long term real estate investor mindset.

If you fit the financial criteria above and you’d like to make $250 a month or more as a passive private lender and real estate investor using my money you need to give me a call. Why would anyone lend you money at 5% and borrow it back at 10%. That seems like a terrible business decision?!?!? I guarantee when you get on a short phone call with me it will make sense very quickly. I can only accommodate about twenty investors into this risk-free, sounds-too-good-to-be-true-but-isn’t, private lending and real estate investor program so if you are interested, please schedule a call with me ASAP using this link to my calendar: https://my.timedriver.com/WBYTQ

Real Estate Investor Opportunities – Our team wears a lot of hats so we can provide diverse investment opportunities for our clients: We have brand new homes for sale in Dallas-Fort Worth Texas that create positive cashflow with as little as 5% down.

We buy and sell notes to help our income investors achieve cashflow. We currently have notes available for sale! Our supply of notes is relatively small and they usually sell very quickly to our inner core of clients who pick up the phone and make their investment objectives clear to us.

We aggregate real estate investor capital into private placement syndications (aka group investments) to buy net leased commercial properties.

We are a hard money lender and buyer of income producing notes. If you have quality notes for sale, give me a call.

If you are a real estate investor looking to increase your wealth and cashflow as a hassle-free cashflow real estate investor, try scheduling a 30 minute phone call with me to see if there is an opportunity for us to work together. https://my.timedriver.com/WBYTQ

Best regards,

David Campbell
Real Estate Investing Strategist
Founder of Hassle-Free Cashflow Investing
Office: (866) 931-9149 Ext. 1
Cell: (707) 373-9966

You may schedule a investor strategy consultation with professional real estate investor David Campbell by using this link to his online calendar. https://my.timedriver.com/WBYTQ

Keyword: real estate investor

2014 Economic Predictions For Real Estate Investors

by professional investor David Campbell

A year ago I published my economic predictions for real estate investors in 2013 on my BLOG. It’s fun to go back in time and see how well my crystal ball worked. Click here to read my 2013 real estate investor economic predictions and with the benefit of hindsight see if you agree my predictions were pretty spot on.

My 2014 Economic Predictions are short and sweet:

“More Federal stimulus ahead causing malinvestment in localized asset bubbles”. I’ll say that again but in English this time. “People do stupid things with easy money and there is a lot of easy money floating around. So, when you get some of this easy money don’t be stupid with it!”

The current level of prosperity in the US is being fueled by the “wealth effect” which is fueled by massive government stimulus propping up asset prices (mostly the stock market and to a much lesser degree the housing market as well). The prosperity feels real from the standpoint that people are spending and earning money again. However, this is a game of musical chairs and you won’t want to be the last one standing. Economic stimulus through the printing press is like taking a drug that makes you feel great until the buzz wears off; then you have an economic hang-over worse than your original problem. I believe we are at the end of the economic hang-over created by the last boom and bust cycle and we are just ramping up the euphoric feeling of the current QE infinity inflationary cycle.

The following are my specific 2014 Economic Predictions for real estate investors :

Very few people are bold enough to make specific predictions because the more specific you are the easier it is to be wrong (and most people hate being wrong). Take these predictions with a grain of salt. Forward this email to your friends and use it as a conversation starter. You can use the dialogue to make up your own predictions for the year. I really want to hear your feedback about these 2014 Economic Predictions on my Facebook page. After you are done reading, come find me online https://www.facebook.com/cashflowinvesting

David Campbell’s 2014 Economic Predictions for Real Estate Investors

Real estate rents, wages, food, interest rates and energy prices will rise moderately in 2014.

Gold will trade $1150 – $1450 and silver will trade $18.50 – $23.00.

I predict 30 year owner occupied mortgage interest rates to go up to five percent by July and hover in the low fives through the end of the year. Commercial mortgage rates will be lower than residential mortgage rates because commercial banks will remain flooded with cash and have no one to lend it to.   Residential interest rates will creep up as the government withdraws stimulus from that part of the market in an effort to moderate housing price growth.

Wall Street funds that bought large portfolios of foreclosed homes will start to liquidate their single family holdings as a result of increasing adjustable rate mortgages (*many Wall Street investment funds bought houses with short term adjustable rate loans and those loans are either coming due or are looking at the probability of rising interest rates).   These Wall Street funds never intended to be permanent landlords (and they aren’t very good at it). With home prices up this is a good time for these funds to start cleaning up their portfolios by liquidating their most troublesome and most price inflated properties.   The release of this inventory will put a downward price pressure in those markets who had the highest rates of appreciation from the trough. I would be very cautious about buying into Las Vegas, Pheonix, San Francisco Bay and Southern California and if I already had a sizable profit tied to a property in one of those markets I would consider exchanging out of it.

I remain a huge fan of the Dallas-Fort Worth metro. I do have a personal bias for telling you about that market because I am building and selling rental houses in Dallas and Fort Worth, but there are a lot of other really smart people who are very bullish on Texas. Here’s a great video by the North Texas Economic Commission why the DFW economy is at the very beginning of a long term upwardly trending market.

I am also intrigued by Charlotte, Denver, Atlanta, Miami, Tampa, Washington DC metro, Portland, and Seattle but not nearly as much as I like Texas. I predict all of the major cities and small oil towns in Texas will have 6-10% housing price and rent increases along with lower rates of vacancy (6.5% vacancy or less).

Bit coin will get more media attention, but its pricing will become even MORE volatile such that only the blackmarket economy will really accept it for payment. Governments around the world will find a way to tax bitcoin.

Stock prices will become extremely volatile in 2014. Watch for heart wrenching price swings of 10-15% up and down in a given month. Stock traders will make record profits in 2014.   Stock investors will end the year sideways or down. If you aren’t sure about the difference between an investor and trader, here’s a great article for you.

The unemployment rate is much worse than the published numbers because many people who have expired off of unemployment benefits and have stopped looking for work or they have moved onto the rolls of Federal disability. States pay for unemployment benefits but the Fed pays for disability so cash strapped states are moving people off unemployment benefits and onto Federal disability benefits as a way of balancing their budgets.   Those on disability are not counted as unemployed.   Expect to see a jobless economic recovery. The gap between the affluent and the poor will widen because the affluent make money by owning assets which are inflating in price while the poor make money selling their time but there will be fewer and fewer jobs for unskilled workers as a result of increased environmental protection legislation and higher minimum wage laws. “The best way to help the poor is to not be one of them.” – Laing Hancock

2014 will be a prosperous year for many. Be careful not to sucked into speculative investments because fiat currency will be causing malinvestment everywhere. If you are looking for a fast read on how fiat currency manipulation leads to bad decision making I highly recommend reading “The Clipper Ship Strategy” and “Whatever Happened to Penny Candy” by Richard Maybury.

A mentor of mine once said, “There is no such thing as a good or bad economy” You can only be skilled or unskilled in your interaction with the economy.”

If you’d like to discover more ways how you can use your eight essential resources to get good at this economy, be sure to take advantage of the offer of a no-cost personal investment strategy consultation with me – David Campbell. It’s a powerful way to start off your year. https://my.timedriver.com/WBYTQ

Best regards

David Campbell

Real Estate Investing Strategist
Founder of Hassle-Free Cashflow Investing
Office: (866) 931-9149 Ext. 1

FREE Investor Strategy Consultation – Valued at $300

Are you looking for ideas of what to do with your business and investments. You have the opportunity to discuss your goals and financial strategies with millionaire investor David Campbell.

David Campbell is the Founder of Hassle-Free Cashflow Investing – an organization that helps real estate investors and business owners acquire wealth through turnkey real estate investments. David is the CEO of a investment real estate brokerage, development, and property management company with well over $100 million of real estate transactional experience. His professional background includes real estate development, apartments, condo-conversion, retail, and office.

You can schedule an investor strategy consultation with professional investor David using the below calendar link to book your FREE phone appointment. https://my.timedriver.com/WBYTQ

Your call with David is to help you gain clarity on your financial goals. Nothing will be promoted for sale on the call.