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- INTRO PART 1 – Intro To Hassle-Free Cashflow Investing
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- INTRO PART 4 – Getting From Where You Are To Where You Want to Be
- INTRO PART 5 – Taking The Hassle Out Of Your Real Estate Investing
- INTRO PART 6 – Formulas – Using Arbitrage To Increase ROI
- INTRO PART 7 – Understanding Leverage Ratio
- INTRO PART 8 – Calculating ROI Using Leverage Ratio And Arbitrage Spread
- INTRO PART 9 – Increasing Arbitrage Spread Magnifies ROI
- INTRO PART 10 – Property, Location, Team, Financing, and Expectations
- INTRO PART 11 – How To Make Money With Real Estate Investing
- INTRO Part 13 – Are Passive Investments in Real Estate Right for You?
- Video Series – Real Estate Math
- Lesson 1 – Calculating Return on Investment
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- Lesson 6 – Calculating Interest Rate
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- Strategies for Protecting Your Income and Wealth from Rising Inflation
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- A Real Estate Investor’s Comparison of IRA, ROTH IRA, and 401(k)
- Tax Planning Strategies For Cashflow Real Estate Investors
- Year End Tax Strategies for Business Owners and Real Estate Investors
- Using A Self-Directed IRA to Create Hassle-Free Cashflow
- The Ultimate Tax SmackDown Event: Solo(k) versus IRA
- Back to Basics Bookkeeping For Real Estate Investors and Business Owners
- Using A Self-Directed IRA When Your Income is High But Your Balance Is Low
- Taxmaggedon: tax strategies to Protect Yourself From Tomorrow’s Taxes!
- Creating Powerful Retirement Accounts for Business Owners & Real Estate Investors
- Falling in Love with Real Estate Bookkeeping
- Real Estate Investor Tax Deductions and Investing Strategies
- Why Do Hassle-Free Cashflow Investors Love Texas Real Estate
- Hassle-Free Cashflow Investing Secrets
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- Recordkeeping: Keep the Receipt or Lose the Deduction
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- choosing entity type
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Successful investors need to be able to make an educated prediction about which way markets and economies are moving.
Champion hockey player Wayne Gretzky explained the secret to his success like this: “I skate to where the puck is going, not where it is.” The same advice applies well to real estate investing. If you are willing to make a prediction where the economy is going and you are willing to take action on what you know, you can make a lot of money.
The economy and the real estate market have trends. There are times to buy real estate, times to sell, and times to just hold on. Real estate prices move up slowly and come down quickly. Fortunately, real estate trends are easy to spot and make a prediction on if you know what to look for. Unfortunately, by the time most people recognize the trend, it is too late for them to get into the game.
The real estate market is trending and I am going to spell things out for you in the simplest terms I can. Each prediction and action step could fill a ream of paper in supporting arguments, so for the sake of brevity take things at face value for the moment and in my blog we can dig into each prediction separately as time and interest permits.
Here is my best prediction and action steps to making money in real estate over the next ten years:
PREDICTION 1: Inflation will cause prices to rise substantially as the dollar devalues. I’ve been talking about this phenomenon for the past two years, and it has finally made its way into the mainstream media as retailers are raising the cost of food, fuel, and finished goods. You can visit my blog to read my extensive writing on this subject. I particularly recommend this series of articles on how to profit from inflation.
ACTION STEP 1: Acquire income producing real estate with as much fixed interest rate debt as possible. Do not skim over this statement too quickly. Having both debt AND income to service the debt are vitally important. The income will inflate with the currency and the debt will devalue with the currency. As an investor, you need to prepare to win from inflation by having both of these financial tools in your arsenal (fixed rate debt and rental income).
PREDICTION 2: Texas will dominate job growth and population growth in the United States. Again, I’ve written extensively about this in my blog: Texas Dominates Market Share. If you are acquiring income real estate as a long term investment, you simply cannot ignore Texas. If Texas were it’s own country, it would be one of the largest in the world from the standpoint of population size, geographic size, economic power, and political clout. It would also be one of the fastest growing countries (states) in the world.
ACTION STEP 2: Acquire income producing Texas real estate near major metros within a short drive of major job centers. There is a lot of open space in Texas however, land is just now becoming scarce in the urban centers. The scarcity of land in the major metros is an emerging trend for you to capitalize on. People need jobs and houses. You should own houses near major job centers so there is a constant demand for your housing. A major job center will have at least 1,000 employees and will create a good or service that imports revenue from as far away as possible (e.g. a business with a local and world wide customer is more economically stable than a business who only has a local customer). To learn where the revenue importing job centers are, here is an interactive map for you to use. (Special thanks to Hassle-free Cashflow Interns Rob Kippel, Brandon Krasner, and Heather Weldon for their assistance in creating powerful tools for you to use. If you are interested in becoming a Hassle-free Cashflow Investing intern, please send us an email.)
PREDICTION 3: Hispanics will dominate population growth throughout the US and especially in Texas. The Hispanic population of Texas grew by 2.8 million people over the last decade. This accounted for 65 percent of the state’s growth over the last 10 years. In 17 Texas counties, the Hispanic population grew by more than 100 percent. The Hispanic market is the fastest growing segment of the middle class. Here is a great newspaper article on the subject. I predict this trend will pick up speed partly because of immigration and partly because the Hispanic birthrate is double what it is in other ethnicities.
ACTION STEP 3: Invest in real estate and businesses that would appeal to a middle class Hispanic market. Make sure your property managers speak Spanish and advertise in Hispanic media. Hispanic families often have more children, have multiple generations and families that occupy a single home. Buy properties with several bedrooms, but modest square footage to be price competitive. Real estate prices go up when more people compete for a limited supply of inventory. Own the types of property that the maximum number of people would like to live in – single family houses with 3 or 4 bedrooms and 2 bathrooms. A master bedroom is essential. Game rooms, lofts, and media rooms are a non-recoupable expenditure to a cashflow investor.
PREDICTION 4: Domestic military spending will contract. As the US becomes further entrenched in foreign wars, the US will spend less money keeping troops inside its borders.
ACTION STEP 4: Do not invest in military towns. If a military base represents more than 10% of a local economy, put your dollars somewhere else. It isn’t worth the economic risk if the military downsizes or eliminates the military base that is the lifeblood of your town.
PREDICTION 5: Fewer people will be attending college and more people will return to manufacturing. The US economy is globalizing and many white collar jobs are headed overseas. As the dollar devalues, it will be more competitive for the United States to manufacture things and export them to emerging markets in Asia and South America.
ACTION STEP 5: Invest in areas of the country such as Dallas where there is a tremendous amount of manufacturing infrastructure already in place. Large manufacturing centers need transportation logistics such as heavy rail, trucking centers, highways, and cargo airports. Manufacturing centers also need a very cost effective workforce and real estate prices. Dallas-Fort Worth is a prime market for this.
PREDICTION 6: States with a favorable business climate and a low income tax burden will enjoy the most prosperous economies. Formerly prosperous and business unfriendly states such as California will raise taxes, lower wages, and default on government pensions to cover their economic shortfall. In areas where big business feels constrained by taxation, labor relations, and environmental regulations, expect declines in government services, poor quality public education, and weak transportation services as a result of unparalleled shortfalls in revenue and a declining business environment.
ACTION STEP 6: Examine the financial well being of any state, county, and city in which you decide to invest. Live where you want to live, but invest in areas where local and state governments embrace responsible business growth.
PREDICTION 7: Interest rates will rise as the US government receives foreign political pressure to stop buying its own bonds and mortgage backed securities. The stock market will see unexplained and radical fluctuations in value as the government manipulates stock prices through covert buying and selling of public traded stocks.
ACTION STEP 7: Do not invest your IRA in the publicly traded stock market. Cash investors can get in and out of the stock market when times are turbulent while IRA funds are often “stuck” in the market with no place to go. Evaluate options for investing your IRA in private placement investments, businesses, notes, or the indirect ownership of real estate. I do not recommend buying real estate directly inside your IRA, but there are great strategies for getting your IRA funds into the indirect ownership of real estate. If you’re interested in this, send me an email and I’ll send you some great information on creative ways to invest your IRA in non-volatile IRA friendly assets. There is no one size fits all investment / financial strategy. That’s why we want to hear from you so we can help you develop a personal investment philosophy and then take action on it. If you’ve read this far, pick up the phone 866-931-9149 ext 1 or send me an email so you can take action on these ideas. CLICK HERE to schedule a no cost investor strategy consultation with David Campbell or one of his team members. We are here to help you come up with creative investing ideas and solutions to your financial goals.
While I hope everyone reading this will do business with my real estate development and investment companies, I appreciate that there is no one size fits all solution to your financial goals. The purpose of an investor strategy consultation is to help you understand what your financial goals are and find a customized solution to solving them. I look forward to hearing from you and hopefully I will be able to introduce you to an idea, person, or opportunity that will revolutionize your financial life.
To your success!
Professional Investor, Developer, and Financial Mentor