Can You Really Build Wealth on $50K?

[00:00:00] Speaker A: This is rental property news i'm heather anderson let's get started on our top story this story comes from lewis howes he is a three times new york times bestseller author and former pro athlete top one hundred global podcast congratulations louis he's interviewing somebody named jaspreet singh explaining how to become financially independent even if you're only making fifty thousand a year let's say take a listen between fifty. [00:00:30] Speaker B: Thousand and one hundred thousand dollars right now twenty twenty four what should they be thinking about in terms of building wealth what's a couple of steps or a system they can put in place if they have zero financial education if they have they don't even have the right beliefs but they could start setting themselves up for five ten twenty years in the future where they're going to say wow i'm so glad i made those those few steps that jaspreet told me to do back in the day what would those steps be well the. [00:00:58] Speaker C: First thing is understanding that even if you're making fifty grand a year you can retire a millionaire and live a life of financial freedom if you start taking action now the thing that everybody likes to talk about i'll give the end goal and i'll show how to actually do it because everybody says if you invest dollar one hundred a month from age twenty one to sixty five you'll have over a million dollars when it comes time for you to retire okay how where when and you know what do i do so number one understanding the numbers the math will show you that you can become a millionaire now you got to dissect the how do i actually go about doing it because everybody says invest your money but what does that mean so and where. [00:01:36] Speaker B: Do i invest in the stock market individual stocks funds real estate real estate funds apartments you know it's crypto gold like what am i supposed to do. [00:01:44] Speaker C: So you start by not spending all of your money a simple thing that i talked about is my seventy five fifteen ten plan which means for every dollar that i earn seventy five cents is the maximum that i can spend fifteen cents is the minimum i'm putting aside to invest ten cents is the minimum i'm putting aside to save now the first thing everybody says when i say that is jaspreet how in the world am i going to live off of three quarters of every dollar that i earn i'm already struggling to survive well you got to make this decision right now which is what's more important to you right now do you want to build your future wealth or do you want to continue having the nice things then everybody says jaspreet i'm already living tight like i what do you mean i'm already living paycheck to paycheck things are already tough well i'm going to just all i can do is give you the reality and the reality is it's going to be harder next year it's going to be even more difficult the year after that and it's going to get even more difficult the year after that the path to building wealth is not that complicated you have to have some money you have to put this money aside for investments if you're spending all of your money you're never going to build wealth and now you got to figure out what are. [00:02:51] Speaker B: You going to cut out but jaspreet i've got my parents who need support i've got family members who are struggling i've got my friends that want to go out on the bars three times a week and concerts and activities and i got to buy nice clothes for my job and i've got to commute to work and i've got to do all these things that cost a lot of money jaspreet what do i do. [00:03:11] Speaker C: Where you put your focus you're going to see the biggest results if you want to lose weight you got to put your exercise in the your focus in the gym you got to put your focus on your diet if you want to advance in your career you got to put more focus on your job and learning how do you advance in your career if you want to build more wealth you got to put your focus on learning how to do that and changing the way you spend your money. [00:03:34] Speaker A: Well looks like jespreet brings very fundamental ideologies to basic wealth creation if you are a first generation to be millionaire then almost certainly these financial fundamental principles will apply let's take a look at the comments lewis howes does have a new book out it seems make money easy if you want to check that out and one comment down from varun he says a million dollars doesn't buy you much today tomorrow it won't buy you diapers let's talk about at least a ten million it's a good point varun i understand where you're coming from however why don't we get to your first million and then we'll talk about ten million because you have to get to one before you get to ten and i find when i hear comments like like that it typically means people are quite a ways away from one million so start with your first million and go from there and jaspreet has great principles to teach you how to do it now the question though would be and maybe varun has a point here would one million buy you commercial real estate that's what we're going to be talking about let's hop into our next story from a company called deloitte might have heard of them next generation leaders may accelerate real estate investment in alternative properties is the headline of their article it says us commercial real estate investing opportunities favored core property sectors for decades but recent market forces and new leadership could knock down long establishment established pillars traditionally commercial real estate owners and investors build portfolios of properties by selecting a wide array of high quality assets defined within four core property types office industrial retail and apartment a diversified portfolio of these core assets provided consistent income for rental growth sustained value appreciation minimal variability performance this approach was generally enough to meet investor objectives and and even outperform other financial assets like equities or stocks or treasuries when adjusting for risk but they're saying hold the boat not anymore the emergence of alternative property sectors has began to topple long established pillars for cre commercial real estate portfolio construction at the same time more of the industry's top decision makers are approaching retirement challenging the next generation of leaders to adapt conventional strategies but over the next decade fundamental shifts in real estate investment could occur from the emergence of niche property types coupled with next generation leaders accelerating non traditional portfolio construction decisions the deloitte center for financial services predicts that by twenty thirty four it's in about eight nine years the value of alternative properties will grow at least fifteen percent compound annual growth rate to account for nearly seventy percent of industrial values well first of all let's take a look at who is deloitte it's a multinational professional service network and one of the big four accounting firms it provides audit and consulting financial advisory risk management and tax services it's a global network for member firms that work with a wide range of clients including many of the world's largest companies they do audits they do consulting financial advisory risk advisory and tax so they work for many of the world's largest companies are you one of the many world's largest companies or are you a normal person like me what does a normal person like me do with this information well let's get back to that question and let's discern who more deloitte center for financial services is and does the deloitte center for financial services provides timely insights on the most pressing issues facing the industry helping keep your organization a step ahead and if you dive a little deeper it looks like they have different sets sectors banking and capital markets commercial real estate insurance investment management about deloitte center for financial services it says which it supports the organization's u s financial services practice provides insight and research to assist senior level decision makers within banks capital markets firm capital markets firm firms investment managers insurance carriers real estate organizations the center is staffed by a group of professionals with a wide array of in depth industry experience as well as cutting edge research and analytical skills through our records roundtables and other forms of engagement we seek to be a trusted source of relevant timely and reliable insights and here is the current team i suppose or some of the research team so if they are talking to senior level managers you might want to discern what information you want to abstract from this and what you don't sometimes as an investor with big company if you're a big company investor with a lot of money that isn't your own sometimes your objective is to find the thing that makes the most money but if you're normal person like me and you don't have a hedge fund or a water fund or a pension fund or a reit or a syndication or a huge money raise and you're more like the person jaspreet was speaking to the fifty thousand a year person then maybe it's not about what makes the most money maybe it's about what drives you because either way no matter way you slice it and you dice it any kind of real estate investment is a long play for the most part unless you flip but any hold strategy is always going to be a long term thing several years so liking it has a value because quality of life has a value and if you like something then you do it and you pursue it and you stay motivated if you don't you don't so deloitte is seeing the shift toward alternatives is already underway alternative property types include data centers cell towers life sciences laboratories health care buildings self storage facilities single family rentals senior housing and student housing among others among others and some real estate leaders are pushing to realign their long held portfolio construction proclivatives so where are you on this one wild and precious life journey my dear friend because maybe you have that kind of money that this article is speaking to maybe you are a ceo of a large entity or an entity that has money to to move or maybe you're not so so we've talked about reits here on rental property news before but deloitte in this article saying public real estate investment trust reits have spearheaded the adoption of alternatives enabling access to a wide range of real estate assets while the private real estate market has approached allocations with more caution reits have increased their allocations to alternatives in the public markets from twenty six percent in two thousand to more than fifty percent in twenty twenty four meanwhile following the pandemic the original ncr eif fund index open end diversified core equity od ce an index of twenty five private funds responded to the growing demand for some alternative types by adding these asset classes to the index but the core property types still make up more than ninety percent of the total value so what is the open in diversified core equity in creaf fund index what does that mean let's take a look because you might you might be a reit person maybe you realize owning the individual assets not for you for a variety of reasons or maybe your version one is is just to hold reits a real estate investment trust but you can i i just found the ncreif website here and it's a dot org okay so it looks like it's a five hundred one c three the nfi odce is a specialization weighted gross of free time weighted return index with an inception date of december thirty first nineteen seventy seven so this is a fund that's been around a long time now the question i had was can you buy this thing and i did a quick google search it says it's not possible to directly buy this index as it is an index it's not an investment product however you can invest in funds that aim to track the performance of the nfi odce index that sounds something like you can't buy the s and p five hundred but you can buy the s and p five hundred fund that tracks that tries to mimic and track the whole of the s p the index fund not the index itself so maybe that's similar to that so who wrote this article that we're reading about deloitte well had three authors and what do they do nathan florio mark and tim i took a look at just the top one here nathan and nate is quite impressive this young man he has been with deloitte since twenty twenty four years and he's the principal in the deloitte advisory real estate practice he is a deloitte advisory growth leader and esg leader for the real estate industry he leads a real estate consulting practice specializing in real estate valuation real estate financial advisory real estate asset portfolio mergers and acquisitions lease advisory services and real estate engineering and depreciation services so it's able it's important to discern of of what information you want to take from this dollar article and what information you want to leave on the table okay it's important to know who writing the article what their what their audience is and what information you can discern from it that you can use as you grow in your investment strategy continuing on with our multifamily discussion and commercial real estate discussion let's let us go into this little sector from multi housingnews dot com it says at a volatile time multifamily outlook stay steady okay experts share insights on the industry's prospects during an mh invoices mid year webinar so sometimes i wonder is is are the panelists from multi housing news are they positive about the multifamily housing outlook because they are at a multifamily housing webinar i don't know do you does anyone what's the narrative let's take a look to see if we can discern some of those questions so it says a wave of new supply mixed with robust net absorption bolsters the sector even with expected construction slowdowns and only a moderate rent increases according to data from the yardi matrix new unit completions reached a peak of six hundred fifteen thousand units last year and are expected to gradually decrease by forty three percent in twenty twenty seven so that is the estimated projection and what is yardi matrix yardi matrix is a industry comprehensive market intelligence tools what they call it for investment professionals equity investors lenders and property managers who underwrite and management investments in multi family student housing industrial office and self storage property types we provide nationwide market and institutional research research reports that leverage property level details of multi family properties yardi matrix also uses data in the yardi property management system standard stack to create aggregated and anonymized operating expense revenue and operational metric data that improves underwriting analytics and competitive benchmarking they've been around looks like since initiating the phoenix service initiating phoenix services in february of zero one right a few months before september september eleventh of two thousand one the company now has a presence in one hundred and eighty one states so yardi matrix is a leader in data in multifamily apartments so that's who did this report so we can go down here to some of the other points where was it okay another factor in occupancy is interest rates which have discouraged some would be at home buyers and added a solid demographic group to the winter pool meaning if people aren't going to buy a home they're going to have to rent people who may want to buy a home and are economically stable are instead deciding to rent because interest rates are so high meaning they can maybe rent for less than they can buy these indicators are also denying delaying current multifamily residents decisions to search for apartments one thing has allowed supply to be absorbed is reduced turnover and the availability of units consumers have had have their hands in their pockets right now and when consumers are scared they don't move do you agree with that what do you think because as we move on to our next article by the same company multi house multihousingnews dot com multifamily report for april of twenty twenty five it says the us occupancy rate has clocked in at his lowest level in more than a decade according to yardy matrix but doesn't that last statement just sound a little contradictory because if renters aren't moving and they're not buying that means more people are renting and wouldn't the increase in renters increase rent amounts usually that's the case supply and demand simple economics however that is a difference of what that last statement read the u s multifamily market continued to exhibit moderate growth at the start of the second quarter in twenty twenty five according to yardy matrix latest survey of one hundred forty markets sustained by a combination of a robust labor market and a weak home sales market the average advertised asking writ increased by five dollars to seventeen thirty six in april for a zero point nine percent year over year growth the national occupancy rate is stabilized property slid to ninety four point four percent in march the lowest level in more than a decade but ninety five percent is still pretty high occupancy meanwhile the single family build to rent advertised asking rates rose five dollars to twenty one seventy eight in april and the occupancy rate fell zero point six percent year over year ninety four point eight percent in march so if we look at this graph here you can see this as year over year rent growth all asset classes it's a little hard to read sure but you can see here's kind of where it starts to go negative this city is miami and these cities to the right show decline in rent growth so basically rent loss year over year okay so when you look at this graph independently you kind of think oh well it's probably not a good idea to buy rentals or multifamily in these markets and by the way my market dallas is on there it's this one right here you have austin also pretty precipitously negative that's negative five percent you have raleigh you have atlanta you have charleston you have houston three major markets in texas but every other report you read said texas is the place to buy you have have las vegas you even have nashville you have phoenix you have orlando and denver let's let's keep that remembered for a minute and then let's move on to our next story we have ipropertymanagement dot com is giving a quick report here of the average rent by year okay it's saying the average monthly rent in the us in twenty twenty four was fifteen thirty five up five point one one percent year over year that's an average for the us if the trend continues the average renter will pay nineteen thousand eight hundred and one it's okay that's not per month thank god but that work that's per year so sixteen fifty a month is what that equals to where are you on that average are you above that average or below that average if you are renting or even if you're owning but specifically renters if you'll notice here this comment says twenty twenty three had the largest year over year average rent increase eight point eight five percent since nineteen twenty one that was about a hundred years ago about a hundred years ago and remember to better understand the future we must first learn from the past we can see the average rents from in twenty twenty five year over year all the way to the year two thousand so average rent in the year two thousand was dollar six hundred thirty nine and now it's sixteen fifty so up one thousand dollars per month pretty precipitous and you can see the power of compounding interest which we've discussed on another episode of rental property news before and just see how compounding interest three percent three point six three percent four point four five percent three point nine three percent per year gets one thousand dollars increase per month in twenty five years feels pretty significant to me does it to you in nineteen twenty the average rent increased by a record eighteen point eight three percent and nineteen thirty three which was after the great depression of nineteen twenty nine saw the largest year over year decline in average rent negative thirteen percent here is a graph showing rent was twenty seven dollars on average in nineteen fifteen forty up to fifteen thirty nine in twenty twenty five so if you look at this large graph does it look like the grid is just going up and to the right it sure does to me so when we read these articles that say contrarian views or things such as that you have to remember the big picture real estate always goes up and if we check out our friends again at multihousingnews dot com multifamily investors is this the time to buy after a strong start of twenty twenty five volatility in a possible recession our wild cards early trends this year bore out that expectation in the first quarter multifamily investment sales jumped thirty three percent year over year to twenty eight point eight billion so if rents are falling in some markets but but but sales are going up is that a buyer's opportunity is that an investor's opportunity where are you on that side of the spectrum there's uncertainty out there that's impacting volume but at this point it doesn't seem to be impacting price that's from bill hill hill ceo of midamerica apartment communities and we have amy carbons down here saying hey maybe there's a slight resistance of inbound foreign investments who tend to be more cautious generally but everyone else family offices life companies pension funds everyone wants to invest but have the similar constraints and that they just can't blindly invest without regard for cap rates so nevertheless the current climate has been affected by so far by anything like the interest rate volatility of twenty twenty two that means investment volume will continue to rise if not surge in no small part to the strength sector's fundamentals she said hey if you put a deal on a contract in sixty days later treasuries are seventy five basis points different that kind of makes things a little challenging but the multi family sector continues to benefit from steady household formation and the ongoing affordability challenges in the home sale market during the first quarter nearly one hundred two thousand units were absorbed nationwide a twelve percent year over year increase according to cushman and wakefield that also compares favorably to the pre pandemic average of seventy three thousand net move inside per quarter so even in flat or buyer's markets things are still moving and shaking let's check out invest corp weighs in on this this is a conversation we're having invest corp completes the series of multifamily sales totaling five hundred fifty million so in the wake of oh no speculation what's going to happen in the future what we can know for sure is that they made a a sell invest corp a leading global alternative investment form today announced that it has completed the sale of twelve multifamily assets across five states including the full liquidation of a multi family portfolio at an aggregate price of five hundred fifty million half a billion despite a tempered multi family market investcorp was able to exit in assets at a premium reflecting the strength of the underlying properties as well as the firm's ability to defy to deftly navigate challenging investment environments the dispositions were executed in a series of transactions beginning in may twenty twenty four so over almost a year actually exactly a year and looks like the buyers stuck and the deals closed and where were these deals so the assets are ninety four percent occupied on average and are situated in desirable rental markets including atlanta philadelphia raleigh north carolina saint louis missouri as well as tampa and orlando in florida but wait i thought we read the year over year rents were declining in a lot of those markets atlanta is right here orlando is right here here charlotte is right there i don't think that city was part of it but that's in this city in the state miami is right there h so if those sold but those are in declining markets and how could they sell well because remember no matter what happens in real estate the chart always goes up and to the right when it comes to increased rent and demand because people will always need a place to live and there will always be renters in every economy just like there was in nineteen forty and just like there will be in twenty twenty five and just like there was in nineteen twenty and there will be in twenty one twenty five even when people are living in the metaverse and on the moon and on mars people will always need a place to live and longitude and latitude are non replicable one property on one place on earth forever and always and you can own it if that is the pathway you choose to go in there will always be a demand for homeownership and people to live in rentals so someone else that believes this is barbara corcoran and she's selling her huge manhattan beautiful home in this flat slash buyer's market or whatever it is time will tell what it would be called after we're said and done but she's one of the leaders in real estate and she's still making moves as a seller in this market let's take a look at her apartment and her story you are going to be wowed you it is beautiful this is done by caleb simpson who has an instagram where he goes and looks at people's houses and he had a disclaimer here which was so sweet and he said i'm not being compensated for this video barbara took a chance on me a few years ago asking me to come tour her home when i first started this series that video was the tipping point for my life wow that is a big deal talk about storing up treasures in heaven wow what a gift barbara gave this young man i'll always be grateful for that collaboration and pick up the phone whenever she calls she's literally showed me and you all of our all of our homes kind of wild yes it is caleb the american dream is alive and well friends and look at caleb's beautiful testimony and look at barbara's beautiful testimony worth her twelve million dollar new york city apartment oh yeah. [00:30:35] Speaker D: What are you doing here i wanted. [00:30:36] Speaker E: To see your apartment you can see. [00:30:38] Speaker D: My apartment i'm selling it it's about twelve million you want to see it. [00:30:41] Speaker E: Maybe you'll buy it oh that's sad you love that place it is sad. [00:30:44] Speaker D: You know you probably don't even recognize it when you were here from last time i've staged it none of this. [00:30:50] Speaker E: Stuff is my own oh my god the crown jewel of the apartment this. [00:30:54] Speaker D: Is insane terrace is a crowd jewel really last time you loved my swing i had a swing here yeah i. [00:31:00] Speaker E: Missed so much i think i could live here and be happy i think you could too yeah how many years did you live seven years seven years in this apartment wow i thought i. [00:31:09] Speaker D: Would never ever move but my husband's older and we can't do the stairs anymore so i really need something simple yeah this kitchen was originally who i bought it from it was a bathroom. [00:31:18] Speaker E: And what's it like when it rains in here it's got to be so. [00:31:20] Speaker D: Beautiful it's great cuz you hear the rain and it doesn't even feel like it's cloudy out it's always bright i feel like i'm selling but that's really. [00:31:27] Speaker E: The truth you're barbara corkin you're always selling and look at this archway coming out looks great right so beautiful i. [00:31:37] Speaker D: Love my garden oh okay cute haircut slept here last night i sleep here a lot of nights when it's good out i one time got rained out of my my deep sleep sleep i get rid of the big pillow i push it aside this is a better pillow yeah i tuck myself really tight. [00:31:51] Speaker E: Okay i sleep like this oh how. [00:31:54] Speaker D: Cuddly you're gonna get yourself a girlfriend looking that way i almost feel like jumping in with you but i think i'm too old nobody can ever go there you know just think about that this is the only room that improved. [00:32:05] Speaker E: This is cool wallpaper it's a little. [00:32:07] Speaker D: Feminine i guess first let's say oh. [00:32:11] Speaker E: We did a full circle okay i'm getting confused i don't know where i am you you're really popping against all the white walls right now with your. [00:32:17] Speaker D: Pajamas well you look at it now i got more furniture than you could shake a stick at because this looks. [00:32:23] Speaker E: Like a good nook to just read a book do you read books i. [00:32:26] Speaker D: Read but only in bed at night and i fall asleep but it takes. [00:32:28] Speaker A: Me forever to read a book a. [00:32:29] Speaker D: Lot of people read during the day i don't get it i don't know how they find the time they want. [00:32:34] Speaker E: To show you my bedroom oh here's here's your famous bathroom two baths a. [00:32:38] Speaker D: Day epsom salt three cups in it makes my bulbs feel good i put in my bathrooms with lavender dew drops getting out of this bathroom is getting harder and harder for me but look at they staged all this i sit at night and i look through things i really want a family to live here that loves it as much as me and that's nothing to do with value or who makes a bid and i'm nervous waiting for a bid in an apartment that's mine with somebody else's stuff in here it just feels weird. [00:33:07] Speaker E: You know yeah somewhere my bedroom would be right by the terrace i could walk outside just have my cup of. [00:33:11] Speaker C: Coffee hey barbara corcoran i don't know. [00:33:15] Speaker A: About you but that's one of the most beautiful beautiful views and breakfast nooks i've ever seen so congratulations on the american dream to you barbara and to you caleb i believe your buyers absolutely out there and as you can see rent in new york city is the number one increase year over year so barbara corcoran you probably know about her but just in case she's the founder of the corcoran group shark tank shark and executive producer of abc's shark tank she is turned lemons into lemonade if you're ever in the new york area check out her firm corcoran dot com if you go down here to about us you can see barbara's story from all the way back from nineteen seventy three when she's a says she's a self described d student named barbara corcoran just twenty three years old founds an epa i don't know what that word is eponymous residential real estate company in a tiny office in the upper east side of manhattan with seven eager agents and a thousand dollar loan and just nineteen ninety one a few decades later looks like she made her sell of the century and continued to grow her career for the decades to come my child my dear sweet listener what will you do with your one wild and precious life will you have a timeline and a story that looks similar to this you have so much capability within you and in order to prepare for the future we must first learn from the past so on this day in nineteen eighty five bruce springsteen belts out born in the usa as he kicks off his nineteen eighty five us tour in washington dc in nineteen eighty five median home prices in washington dc the district of columbia according to the sen census for the us government says nineteen eighty median home prices were sixty eight eight hundred and they jumped all the way up to one hundred twenty three nine hundred so they basically well they didn't quite double but they definitely increased double would be about one hundred sixty six thousand no hundred thirty six thousand thank you so a little less than one hundred percent gain in a decade but there's somewhere between that and today they're worth a hundred i'm sorry six hundred fifty five thousand for the median home price wow it's pretty significant that was about ten x from nineteen eighty basically my lifetime to today forty five years later they've increased six hundred percent don't you wish you'd bought a few in washington dc i know i do remember friends if you like what we're doing here please like and subscribe to our youtube channel will you be the fifty seventh subscriber for this rental property news journey or would you like to give your treasure or your talent click on schedule a consult to reach out to us to see how we can help you build your rental property portfolio in the dfw area or connect you with someone who can in another part of our beautiful beautiful country.