#53 - Eyes On The Horizon: Real Estate Insights from Kathy Fettke

[00:00:00] Hey, welcome back to Passive Income Pilots, everyone. Tait Durye here with the wonderful Ryan Gibson. What's up, Ryan? Hey Tait, happy to see you on the studio today and happy to share our next guest who has been a friend of ours for many years and just an expert on real estate. Yeah, but last time I think we were together, we were skiing in Keystone with Rich and Kathy and just wonderful all around people, consp and real estate experts. Yeah, what's interesting. I've actually been a personal listener of her show for the last decade.

[00:00:30] Called real estate news for investors and in Kathy Fettie is someone who just delivers the news straight. It's like BBC News real estate is what I like to joke around.

[00:00:39] And say if you just want to get a quick snippet of what's going on in the economy and how it impacts real estate or podcasts is amazing, but she's been.

[00:00:47] There's a beacon of knowledge in real estate and economics emphasizing she's got a great media presence and she's got an excellent book called Retire Rich with rentals.

[00:00:56] And she's been on things like CNN, CNN, NBC, Fox News, NPR, CBS Market Watch, Wall Street Journal. She's on two podcasts that she hosts herself and they're part of the real wealth network.

[00:01:10] And you also find her she's part of bigger pockets. They launched a podcast called on the market and she has several co hosts on that.

[00:01:19] And she's also the past president of American Women in Radio and Television. So we're really excited to have another female on the show who is just an absolute leader in the space.

[00:01:30] So with that, yeah, let's get into it.

[00:01:41] Welcome to passive income pilots where pilots upgrade their money.

[00:01:48] This is the definitive source for personal finance and investment tactics for a theaters.

[00:01:53] We interview world renowned experts and share these lessons with the flying community.

[00:01:59] So if you're ready for practical knowledge and insights, let's roll.

[00:02:03] Kathy, thank you so much for joining us today. Appreciate you having so happy to be here, you guys.

[00:02:08] Thanks. So I want to start by just saying I just got back from the Women in Aviation Conference.

[00:02:14] We've known each other for many years introduced through Ryan but just got back from Women in Aviation.

[00:02:20] It was amazing to see so many females in the industry and this has been a very unintentional

[00:02:26] unintentionally male-dominated show so far. It's so great to have someone as powerful as you on the show, thought leader in the space regardless of gender.

[00:02:38] And just wanted to give you a chance to introduce yourself, what you do and maybe inspire some other women to take charge of finance and investing.

[00:02:47] Thank you so much for that introduction and I'm happy to be here representing the ladies.

[00:02:51] And I had that same awakening on my own show a few years ago thinking, wow, I have not interviewed as many women as I want to.

[00:02:59] And I wondered why was it me? Was it them?

[00:03:03] And I came to realize it was both but a lot of women just maybe lack the confidence and getting up in front of people and on stage.

[00:03:10] So that's something I want to bring to the world in my next, I don't know, my next career is actually with my past career.

[00:03:17] I used to do on camera training when I owned a talent agency so it was like, oh maybe I'll do some of that.

[00:03:23] Like really help women with their voice.

[00:03:25] Can you talk about your background?

[00:03:27] You talked about your father being a dentist and his struggles and how you got to where you are today.

[00:03:33] And what advice you might have first, first and foremost for other women that want to gain the confidence to control their own destiny financially.

[00:03:41] And then we can get into all the good stuff.

[00:03:44] Yeah, so my dad actually was a high school dropout.

[00:03:49] He went into the military fought in World War II and what he got from the military was education.

[00:03:56] They ended up paying for him to finish high school and then college and then his dental degree.

[00:04:02] So he was really a turnaround story.

[00:04:05] He met my mom actually because she was a patient.

[00:04:08] So he likes to joke that she couldn't say no because he had his hands in her mouth if he asked her out.

[00:04:13] But over the years, I grew up with an ideal childhood with a beautiful family and we all love each other.

[00:04:20] It was great.

[00:04:21] My dad and my mom both didn't come from money so they didn't understand it even though as a dentist, he was making money.

[00:04:28] And this is pretty common for professionals who are so busy with their own business.

[00:04:35] Obviously, your audience with pilots, doctors, dentists, these high income working people who are so busy,

[00:04:41] they don't really have time to understand investments and what to do with their money.

[00:04:45] So they're relying on other people.

[00:04:49] Right.

[00:04:49] So over the years I would watch my dad make bad decisions.

[00:04:54] I hate to say it but he as a little girl, I hear him get excited about some deal he was doing

[00:05:00] with somebody he met at church and I thought don't do a business with people at church or with friends.

[00:05:05] But he would tell me these ideas and as just a young girl,

[00:05:08] he'd be like that doesn't sound like it's going to work out and it didn't.

[00:05:11] One was so sweet.

[00:05:12] He wanted to have a Christian coffee shop in Las Vegas.

[00:05:15] Dad, nobody's going to Las Vegas for coffee or for Christianity.

[00:05:20] But he didn't always know how to invest.

[00:05:24] Where is my mom?

[00:05:27] We have a friend.

[00:05:28] I grew up in the Silicon Valley.

[00:05:29] We had a friend who is now known as the Godfather of the Silicon Valley,

[00:05:33] Ron Conway, who came to was around two, the year 2000 and said,

[00:05:38] I've got this investment.

[00:05:40] I'm investing in this company that's going to make it easier to find things on the internet

[00:05:45] and all of us were sitting in the living room going to go to the AOLs great.

[00:05:48] My mom's well we should do this.

[00:05:50] This sounds anyway, it was Google.

[00:05:52] So we could, we were literally the angel investors in Google.

[00:05:58] They tenix their money.

[00:05:59] We're like, wow, we made so much money.

[00:06:01] We should sell it.

[00:06:02] Probably I would be a trust fund kid today if they hadn't done that.

[00:06:05] My mom always had a sense of things and one of those was real estate.

[00:06:09] And my dad was just uncomfortable with it.

[00:06:11] So we never did.

[00:06:12] But that's what I always remember.

[00:06:15] And when I became of age where I could start investing,

[00:06:19] that's what I started pursuing.

[00:06:21] That's great.

[00:06:22] Right.

[00:06:23] Kathy, I, it's been so nice getting to know you and Rich.

[00:06:26] And Rich's was on the show, I think 12 or 14 episodes ago, something like that.

[00:06:31] And he really shared a lot of the overall kind of mental health strategies

[00:06:36] and the balance lifestyle.

[00:06:37] And through his book, The Wise Investor, we talked about that.

[00:06:39] So it was really fun to have him on.

[00:06:41] But you really have niched out a space in really talking about the real estate economy

[00:06:47] and or hobby economy impacts real estate.

[00:06:50] You have a show real estate news for investors,

[00:06:52] which I've been a personal listener of that show for probably nearly a decade.

[00:06:55] I think it's been around for about a decade.

[00:06:57] And I love it because it's, it gives people just a quick 10 to 15 minute.

[00:07:02] Here's what's going on.

[00:07:03] Here's what matters trends in the industry that are really applicable

[00:07:06] to any type of real estate investing.

[00:07:08] But would you mind just giving us your thoughts on where we are

[00:07:11] in the real estate world right now in a couple of minutes?

[00:07:15] Just where do you think we're headed?

[00:07:16] Where we are now for our listeners.

[00:07:19] Thank you.

[00:07:19] Yeah, of course.

[00:07:20] I started that show because I do have a background in the news.

[00:07:24] I worked at ABC and CNN and Fox News back when news was news.

[00:07:30] There was no slant to it.

[00:07:32] But I started this show because what's

[00:07:35] I became known in the real estate industry?

[00:07:38] I was asked to be on the news a lot.

[00:07:40] I thought I better know what's going on.

[00:07:42] So what better than having my own new show?

[00:07:44] I'd be on top of it.

[00:07:46] So there's a lot of confusion and so many experts have been wrong

[00:07:51] and wrong over and over again for the past few years.

[00:07:55] Because we've been through something that was really unprecedented,

[00:07:58] at least in our lifetime to have the entire world just shut down.

[00:08:02] Incredible, right?

[00:08:03] Just an incredible moment of time that we maybe look back at

[00:08:07] think we don't really ever want to do that again.

[00:08:09] But the world came to a stop.

[00:08:11] The world was amazing and people couldn't work.

[00:08:14] They couldn't go to work.

[00:08:17] People couldn't manage, there were no manufacturing.

[00:08:19] Things just came to a stop and the Fed came in.

[00:08:23] The Federal Reserve came in and printed a whole lot of money

[00:08:25] and passed that out to people who couldn't work.

[00:08:28] So there were ramifications for the things

[00:08:31] that happened during the pandemic that we just haven't been through before.

[00:08:36] This we just haven't been here before.

[00:08:39] So a lot of people have been wrong.

[00:08:41] But to sum it up, the best way I could sum it up

[00:08:43] is we've gotten really comfortable with this thing called printing money

[00:08:47] or just creating money.

[00:08:48] When I was young, I do remember my dad sitting,

[00:08:51] we were sitting around the dinner table and there was a headline news.

[00:08:54] It was on the front page of the newspaper.

[00:08:55] Remember those newspapers that he's like,

[00:08:57] he's like, yeah, the newspaper.

[00:08:58] And there was a picture of literally a printing machine

[00:09:02] and they printed a few billion dollars

[00:09:03] and the world was just like in shock.

[00:09:06] Like how could they do this?

[00:09:07] And my dad said, boy, if they keep doing this,

[00:09:10] you're going to see inflation

[00:09:12] and because they're printing money

[00:09:14] and yet they're not print, you can't print goods.

[00:09:16] You can't print things.

[00:09:18] Well, now I guess you're gassed 3D printing.

[00:09:20] But money if you can print it,

[00:09:22] it becomes less valuable and that can create inflation.

[00:09:25] And I remember him looking around the table and saying,

[00:09:27] this is the last generation that's going to be able

[00:09:30] to have one person working

[00:09:32] because pretty soon both spouses are going to need to work

[00:09:35] and then the kids are going to need to work because of this.

[00:09:38] It's just again, we're in a place where

[00:09:40] we haven't really been in prior generations,

[00:09:43] at least in our history

[00:09:46] where you could just create so much money.

[00:09:49] But during the pandemic at a time when nobody could work

[00:09:52] but people still needed to live

[00:09:54] and feed themselves and pay for housing,

[00:09:58] those printing machines went nuts.

[00:10:00] There's not a lot of discussion about this publicly,

[00:10:03] but the amount of money that was created in 18 months

[00:10:08] is the amount of money that was in circulation

[00:10:10] in 2007.

[00:10:12] So imagine that.

[00:10:14] Yes.

[00:10:14] All of the monthly trading is what was created.

[00:10:17] We created a whole new economy in that 18 months.

[00:10:21] So it shouldn't have surprised anybody

[00:10:24] that we would see inflation.

[00:10:27] And on top of that, people couldn't work and produce things.

[00:10:32] So you got all this money circulating

[00:10:34] but not the goods that people wanted

[00:10:36] and of course one example is a toilet paper.

[00:10:38] We couldn't get toilet paper and people were freaking out.

[00:10:41] But on our development projects, we couldn't get wood.

[00:10:44] We couldn't get anything.

[00:10:46] We couldn't get even things that we took for granted

[00:10:49] like appliances.

[00:10:51] We had to get vans and drive to other states

[00:10:53] just to find the things that we needed.

[00:10:55] And you pay whatever you had to get those things.

[00:10:57] You guys know, right?

[00:10:58] It was tough time.

[00:11:00] That again is another unprecedented thing

[00:11:03] and you couldn't create housing.

[00:11:05] That's why housing prices continued to rise.

[00:11:08] You had $7 trillion floating around

[00:11:12] and money being handed to people and the PPP loads.

[00:11:15] We're massive.

[00:11:16] There were people that got millions

[00:11:18] and that went somewhere, right?

[00:11:20] And oftentimes it went into real estate very often.

[00:11:23] A lot of it went into real estate and obviously stocks.

[00:11:27] So the hangover is where we are right now

[00:11:30] of all that money and the Federal Reserve

[00:11:32] trying to pull that back out of the system.

[00:11:35] Somehow they were shocked.

[00:11:37] I'm not an economist.

[00:11:39] I just study it like crazy

[00:11:40] because I don't want to be taken off guard.

[00:11:42] So to me, it seemed like the most obvious thing

[00:11:45] in the world that we'd see inflation

[00:11:47] yet the chairman of the Federal Reserve

[00:11:50] was taken off, taken a back he didn't know.

[00:11:54] So that's what we've been dealing with

[00:11:55] for the last couple of years

[00:11:57] is the after effect and the quick raising of rates.

[00:12:01] People are really shocked

[00:12:03] that the speed in which interest rates changed

[00:12:07] didn't send the economy into a recession.

[00:12:10] If we talked to anyone a year ago or two years ago

[00:12:13] they would have said with all certainty by 2023

[00:12:18] and definitely 2024

[00:12:20] we were going to be in a pretty bad recession

[00:12:22] because of the interest rate hikes.

[00:12:25] It's like driving a fast car

[00:12:27] and slamming on the brakes.

[00:12:28] You can drive a fast car and slow it down gently

[00:12:32] and nobody gets hurt.

[00:12:33] But you slam on the brakes, someone might get hurt

[00:12:35] and that's what it felt like to the economy.

[00:12:37] And yet here we are.

[00:12:38] We're still a really strong GDP,

[00:12:40] really strong job growth.

[00:12:42] We're definitely not in a recession

[00:12:45] and in fact the Fed hasn't has stopped raising rates.

[00:12:48] At least they said they have inflation

[00:12:50] is a bit more under control

[00:12:52] but not where they want it to be.

[00:12:54] So people are just mind blown by it

[00:12:56] but if you really just step back and say

[00:12:58] hey, we dumped a ton of money into the system

[00:13:01] that money is still circulating

[00:13:03] and a lot of people just bought things with cash

[00:13:06] and you're not in distress

[00:13:08] when you buy things with cash

[00:13:09] when you buy housing with cash or investment

[00:13:12] and you have so much money for investment

[00:13:13] it's pretty hard to create a recession

[00:13:16] under that environment.

[00:13:17] So that's my take.

[00:13:17] Kathy, that was really well stated.

[00:13:19] The follow-up question of that is

[00:13:21] people say that we have a really resilient economy

[00:13:24] here in the United States.

[00:13:25] Despite everything we've gone through

[00:13:26] and the interest rates and the job reports

[00:13:28] and man we've got a really resilient economy.

[00:13:31] How much of that is just the leftovers of the money supply

[00:13:34] that was pumped in during COVID

[00:13:35] and how much of that is a really resilient economy

[00:13:38] or maybe the two go hand in hand.

[00:13:39] I'm not an economist but I would say it's 100%

[00:13:42] because of the money.

[00:13:44] Economies grow when there's money to invest with.

[00:13:48] When you can borrow money cheaply

[00:13:51] like we were able to for so many years

[00:13:53] you can invest in a whole lot of things

[00:13:55] and you can create jobs that way

[00:13:57] because you're creating businesses

[00:14:00] when that comes to a stop

[00:14:01] and rates go from like the overnight lending rate

[00:14:04] went from nearly zero.

[00:14:05] So you could borrow money for almost nothing

[00:14:08] and suddenly up to what is it now?

[00:14:10] I'm just oh my gosh.

[00:14:12] 5.5.

[00:14:13] Whether it's something like that.

[00:14:14] 4.5.

[00:14:15] Yeah, 5.5.

[00:14:15] It's over 5.5.

[00:14:16] Yeah.

[00:14:17] It's high.

[00:14:18] Yeah.

[00:14:18] 5.5.

[00:14:19] Yeah whatever it is today

[00:14:21] is as much much higher than it was

[00:14:23] and that isn't an exercise in the Federal Reserve

[00:14:27] trying to pull that money back out

[00:14:29] because if money's too expensive to borrow

[00:14:31] then banks can't create it.

[00:14:33] They don't create it.

[00:14:34] That's part of the money printing

[00:14:36] that the US does is let's say you want to go by a car

[00:14:41] and it's $50,000 to buy that car

[00:14:44] at a 1% interest rate

[00:14:46] in the payments $500 a month

[00:14:48] but you're going to buy that car

[00:14:49] and all the sudden that $50,000 is created out of the air.

[00:14:53] That's how our system works.

[00:14:55] Now double that.

[00:14:56] Now the rate has gone up

[00:14:57] and your payment is $1,000 or $1,200

[00:15:00] maybe you're not going to buy that car

[00:15:01] and that money's not created.

[00:15:03] So that's part of the process

[00:15:05] of just pulling some of this 7 trillion out of the system

[00:15:08] which when you look at the money supply

[00:15:10] all you have to do is go to Fred

[00:15:11] it's the Federal Reserve of St. Louis

[00:15:15] type in Fred

[00:15:16] and the M2 money supply

[00:15:18] and you'll see it goes

[00:15:20] and it's trying to come down

[00:15:21] but it's not as it comes very far yet

[00:15:23] and we'll click that money still circling it.

[00:15:24] We'll put the Fred website

[00:15:26] in the show notes because that's a critical resource.

[00:15:28] Definitely, it's a great, great, great resource.

[00:15:29] So I think that this is a really important point, Kathy,

[00:15:33] that a lot of people miss

[00:15:35] because the last recession

[00:15:36] that any of us remember was the Great Recession.

[00:15:38] So everybody goes,

[00:15:39] I'm waiting for asset prices to change

[00:15:41] and I think that it's so important to understand this

[00:15:44] because in the Great Recession

[00:15:46] we didn't even start QE

[00:15:47] which is quantitative easing

[00:15:49] which is printing money

[00:15:50] until what was it? 2012?

[00:15:52] Is that right?

[00:15:53] They didn't turn on the printing presses

[00:15:56] to start injecting capital into the system

[00:15:59] until I believe it was 2012.

[00:16:02] So we went through years

[00:16:03] of letting the economy languish

[00:16:04] because we weren't in the habit

[00:16:05] of just injecting money into the system

[00:16:08] and this time around

[00:16:10] we inject, and I think

[00:16:11] over the entire,

[00:16:12] and don't quote me on this

[00:16:13] but I think it was something like

[00:16:15] two trillion or a trillion and a half

[00:16:17] in the Great Recession

[00:16:18] and we injected what seven trillion

[00:16:20] this time around.

[00:16:21] It's just,

[00:16:22] it's created this new paradox

[00:16:24] where you just can't compare

[00:16:27] when people say,

[00:16:28] oh there's a recession coming

[00:16:29] they automatically assume,

[00:16:31] okay but then the same thing is going to happen

[00:16:33] that happened in 2008

[00:16:34] where nobody had any equity

[00:16:36] and their properties back in 2008

[00:16:39] now we have people with tons of equity

[00:16:41] in their real estate assets.

[00:16:43] So the fundamentals are very healthy

[00:16:45] in real assets

[00:16:46] and then also we've just injected so much money

[00:16:49] that there really is no way to compare the two.

[00:16:51] So we truly are in uncharted territory.

[00:16:54] Yeah, I love to talk about the comparison

[00:16:57] of 2008 to today because

[00:17:00] people are still,

[00:17:02] they have wounds right from that

[00:17:04] people who went through that

[00:17:05] don't want to ever go through that again

[00:17:07] that was a terrifying time.

[00:17:08] I actually think that the quantitative

[00:17:11] easing started in 2008

[00:17:13] because they had to

[00:17:14] the entire,

[00:17:15] that's when believe in brothers collapsed

[00:17:17] and they were sitting in congress going

[00:17:20] we don't know what to do or economies about to fail.

[00:17:22] So they had to come in

[00:17:24] with the heavy lifting there

[00:17:26] and then that's when it became like

[00:17:28] you could do this again

[00:17:30] and they haven't really stopped since then

[00:17:33] but you cannot,

[00:17:34] you cannot compare the housing market

[00:17:37] then to now

[00:17:39] it is it couldn't be more different

[00:17:41] and anyone sitting around thinking

[00:17:42] there's going to be a housing crash

[00:17:44] just doesn't know the fundamentals

[00:17:45] and I'm happy to share that with you if you want

[00:17:47] the difference.

[00:17:48] Fantastic.

[00:17:49] I would love to hear that

[00:17:50] because I think that's a common misconception

[00:17:52] where people are sitting around waiting for

[00:17:54] insurgents to come down

[00:17:55] or waiting for a housing bubble to burst

[00:17:57] when they might just be waiting forever.

[00:17:59] So yeah, let's dive into it

[00:18:01] They will be waiting forever

[00:18:02] and there's people with this

[00:18:03] nar lawsuit

[00:18:05] thinking that's going to have prices come

[00:18:06] to hell

[00:18:07] It's just that's not economics

[00:18:09] it's not how it works

[00:18:10] so back in 2005

[00:18:12] I was a mortgage broker

[00:18:13] and I saw what was happening

[00:18:14] and you could

[00:18:16] I could give what's called a mean alone

[00:18:18] which is a no-income, no-asset loan

[00:18:21] I didn't need to know anything about you

[00:18:23] you could say I want this house

[00:18:24] and I would say great here's an application

[00:18:26] you'd fill it out

[00:18:27] and I'd turn it into the bank

[00:18:28] and you'd get the loan

[00:18:30] It was really that easy

[00:18:31] even if your credit was crappy

[00:18:33] even if you'd never

[00:18:35] paid your bills

[00:18:36] you had no history of paying bills

[00:18:37] so it was a credit boom

[00:18:40] and it came from

[00:18:41] this idea that everyone should be able

[00:18:43] to own a home

[00:18:44] and of course that would be wonderful

[00:18:46] if everyone could own a home

[00:18:47] but not everyone's in a position to own a home

[00:18:49] you have to be able to qualify for that

[00:18:51] you have to be able to pay for that

[00:18:53] and then also back then

[00:18:55] it's so hard to believe that

[00:18:57] this was even a thing

[00:18:58] but you were qualified on a teaser rate

[00:19:01] so to give you an example

[00:19:03] a woman came to me

[00:19:04] and she made $2,000 a month

[00:19:06] and she wanted to buy a house

[00:19:07] that would normally have a payment

[00:19:09] of about $2,500 a month

[00:19:11] so there's obviously no way

[00:19:12] this woman could afford it

[00:19:13] but they were

[00:19:15] they would qualify on a teaser

[00:19:17] like a portion of what the payment would be

[00:19:19] I don't know why

[00:19:20] I remember looking at this woman saying

[00:19:22] this is going to adjust

[00:19:23] in a few years

[00:19:24] and you're not going to be able to make this payment

[00:19:25] you're going to lose this house

[00:19:27] and she's like

[00:19:27] if you're not going to get me the loan

[00:19:28] I'll go to the loan officer next door

[00:19:30] who will

[00:19:31] until I didn't

[00:19:32] I couldn't because I knew that

[00:19:34] she'd lose the house once that payment

[00:19:36] adjusted to what it should be

[00:19:38] but these are the kind of loans

[00:19:39] now

[00:19:40] I want you to know that

[00:19:41] I could have made $9,000 from that paperwork

[00:19:47] because you could add on 3%

[00:19:50] as the loan broker without the client even knowing

[00:19:53] so we were super incentivized

[00:19:55] to commit fraud

[00:19:57] that's all I can say

[00:19:58] I even turned in a loan application

[00:20:00] where the bank came back and said

[00:20:02] this person doesn't qualify

[00:20:03] and I said oh I'm sorry

[00:20:04] I'll let them know

[00:20:05] and then

[00:20:05] the banker said

[00:20:07] we just changed their income

[00:20:08] they qualify now

[00:20:10] like

[00:20:10] you can do that

[00:20:11] and I came home to rich

[00:20:12] and said

[00:20:13] does this sound okay

[00:20:14] and he goes no one

[00:20:15] it sounds like fraud

[00:20:16] do not put your name on that loan

[00:20:17] but this is the kind of thing that was happening

[00:20:19] now in 2012

[00:20:21] that all changed with Dodd Frank

[00:20:23] where now

[00:20:24] you have to

[00:20:25] it's harder to get a loan

[00:20:26] than it's ever been

[00:20:27] you got to open up

[00:20:28] everything they want to know

[00:20:30] everything about you

[00:20:31] back then

[00:20:31] we didn't have to know anything about you

[00:20:33] so the difference

[00:20:34] in the people who own homes today

[00:20:37] is they it's all it was

[00:20:39] open book

[00:20:40] they had to absolutely qualify for the payment

[00:20:42] they had to put a down payment down

[00:20:44] they have had prices go up since then

[00:20:47] so they have enormous equity

[00:20:49] most of these people today

[00:20:50] are on fixed rate mortgages

[00:20:51] back then it was all adjustable

[00:20:53] so as soon as those loans adjusted

[00:20:54] they couldn't pay it

[00:20:56] and the people today

[00:20:57] have the highest phyco stores in history

[00:21:00] the best credit ever

[00:21:03] so let me repeat that

[00:21:04] the difference today

[00:21:06] good credit

[00:21:07] down payments

[00:21:09] tons of equity

[00:21:10] and fixed payments

[00:21:11] and again if you type in Fred

[00:21:14] federal reserve

[00:21:15] and the income

[00:21:17] the mortgage payment to income

[00:21:19] yes

[00:21:19] you will see that today

[00:21:21] homeowners have the lowest

[00:21:23] payment

[00:21:24] than ever in history

[00:21:26] compared to their income

[00:21:27] because in this time

[00:21:28] their wages have gone up

[00:21:30] so the only time

[00:21:31] you could have a housing crash

[00:21:32] is if there's distress

[00:21:33] but when you have homeowners

[00:21:35] who have the lowest payment in history

[00:21:38] and it's fixed

[00:21:39] while their wages are going up

[00:21:40] where the distress might be

[00:21:42] 2021-22 people who bought then

[00:21:46] and paid at the peak

[00:21:48] and then interest rates went up

[00:21:49] but remember

[00:21:50] those people are on fixed rates

[00:21:52] and prices continue to go up

[00:21:53] so they have equity

[00:21:54] they're not upside down

[00:21:56] so again

[00:21:57] in 2008

[00:21:58] it was people who couldn't qualify

[00:22:00] couldn't make the payment

[00:22:01] had bad credit

[00:22:03] a history of not paying their bills

[00:22:05] and on adjustable rates

[00:22:06] so there's absolutely

[00:22:07] no comparison

[00:22:09] for them in that

[00:22:10] I think it's worth pointing out too

[00:22:12] like recessions are not playbooks

[00:22:14] right

[00:22:14] like the

[00:22:15] oh we're having a recession

[00:22:16] let's get the playbook out

[00:22:17] and let's read what happened last time

[00:22:19] this is what's going to happen

[00:22:20] this time

[00:22:21] they do these things

[00:22:22] recessions also don't last forever

[00:22:23] so like

[00:22:24] every recession is going to be different

[00:22:26] and

[00:22:27] we have different things

[00:22:28] so something else is going to break

[00:22:31] this time around

[00:22:32] there's going to be a recession

[00:22:35] like office

[00:22:35] exactly

[00:22:36] office right now is breaking

[00:22:37] so things are breaking

[00:22:39] and banks

[00:22:40] some banks will be breaking

[00:22:42] but they're not the big banks

[00:22:44] and the feds learned how to fix all that

[00:22:47] so again one more thing in the housing market

[00:22:49] because that is my specialty

[00:22:50] that's what we do at real well

[00:22:51] this help investors

[00:22:52] by investment property

[00:22:53] so I have to know this stuff

[00:22:55] the other thing is supplying demand

[00:22:57] if you go back to 2007

[00:22:59] it was the Gen X generation

[00:23:01] that was at first time home buying age

[00:23:03] and when you look at demographics

[00:23:05] that's the smallest generation

[00:23:07] there was a dip there

[00:23:09] there was the baby boomers

[00:23:10] then a dip

[00:23:11] and now

[00:23:12] the millennials who are the baby boomers kids

[00:23:14] you got this huge generation

[00:23:15] that had kids

[00:23:16] that's the millennials

[00:23:17] guess what

[00:23:18] the biggest group of them

[00:23:19] is at first time home buying age

[00:23:21] and yet over the past 10 years

[00:23:23] builders have not kept up with demand

[00:23:25] so now you've got

[00:23:27] again totally opposite situation

[00:23:29] massive group of millennials

[00:23:31] looking for homes

[00:23:32] the supply is not there for them

[00:23:34] and the people who own those homes

[00:23:36] are not giving them up

[00:23:37] but they have 2%

[00:23:38] 3% interest rate

[00:23:40] and many are paid off

[00:23:42] because you've got all these baby boomers

[00:23:43] who paid it off over 30 years

[00:23:45] and they're retired now

[00:23:47] so it's a stuck market

[00:23:49] and again

[00:23:50] this is why we continue

[00:23:52] that's why I have a single family rental fund

[00:23:54] because there's a need

[00:23:55] there's a desperate need for more housing

[00:23:57] that's why we're in the single family

[00:23:58] development business

[00:24:00] because there's a need

[00:24:01] this is why Warren Buffett invested

[00:24:03] just recently

[00:24:04] I forget how much it's a lot of money

[00:24:07] into builder stocks

[00:24:08] yeah

[00:24:09] to be in Warren Buffett wouldn't do that

[00:24:11] if he thought there was going to be a housing crash cubbing

[00:24:13] it's the opposite

[00:24:14] there's housing that's needed

[00:24:16] now let's talk about seeing around the corner

[00:24:18] like you mentioned office

[00:24:19] we want to try to give practical knowledge and insights

[00:24:22] for how pilots can take action

[00:24:24] against their portfolio

[00:24:25] in word of position

[00:24:26] and I think you articulated

[00:24:28] where we are with the residential market

[00:24:29] very well

[00:24:31] so let's talk about maybe what the cracks

[00:24:33] what cracks in the economy do you see

[00:24:35] and how does that kind of impact

[00:24:38] what people should do to position themselves for success now

[00:24:41] because as we know

[00:24:42] a lot of people that shouldn't have bought homes

[00:24:45] were buying homes

[00:24:46] but when that crashed

[00:24:48] it impacted

[00:24:49] like the entire economy right

[00:24:51] so I think we should

[00:24:53] be aware of maybe where the cracks are

[00:24:56] and how to best position around it

[00:24:58] what are your thoughts on that

[00:24:59] yeah the big cracks like you said are properties

[00:25:02] and companies

[00:25:03] and people who

[00:25:06] borrowed money at a low interest rate

[00:25:08] and didn't expect that interest rate to go up

[00:25:12] that's no one did

[00:25:13] some people might have expected it

[00:25:15] in retrospect

[00:25:16] it of course hindsight is

[00:25:18] always too late

[00:25:19] it makes sense

[00:25:20] of course we were going to stay

[00:25:21] at pandemic level rates forever

[00:25:23] but the whole point of lowering rates was

[00:25:25] just stimulate the economy

[00:25:26] during a difficult time

[00:25:27] and then when things

[00:25:29] you know

[00:25:29] came back to normal

[00:25:31] somewhat then rates went up

[00:25:32] and we're really at normal rates

[00:25:33] there's absolutely nothing wrong

[00:25:35] with the rates that we're at right now

[00:25:36] it's just such a shock from where we were

[00:25:38] but so anyone on an adjustable rate

[00:25:40] who wasn't thinking

[00:25:42] that was going to change

[00:25:43] and that they were going to go up so much

[00:25:44] they're in trouble

[00:25:45] and

[00:25:46] had to it with office buildings

[00:25:49] that they were trading at very expensive levels

[00:25:52] at a time when

[00:25:53] all of a sudden in a pandemic hits

[00:25:55] and all the sudden companies

[00:25:57] learn what we've known for a long time

[00:25:59] we've been a remote company for 12 years

[00:26:02] at real wealth

[00:26:03] we've

[00:26:04] bridging i wanted to move to

[00:26:06] southern california

[00:26:07] we left our office

[00:26:08] and then rest of our employees

[00:26:09] like hey if you're going to go live where you want

[00:26:10] we want to live where we want

[00:26:12] okay we think we can do this

[00:26:13] so we learned how to be a remote company

[00:26:15] 12 years ago

[00:26:16] during the pandemic

[00:26:17] everyone else learned it too

[00:26:19] even schools right

[00:26:20] everyone was remote

[00:26:21] so

[00:26:22] companies learned

[00:26:23] gosh i can hire anyone

[00:26:25] i can hire anyone from anywhere

[00:26:27] i don't i have a much larger pool

[00:26:29] and then more software has

[00:26:30] have become available to help

[00:26:33] manage this

[00:26:33] like how do you manage a team

[00:26:35] remotely

[00:26:36] and uh so that's what we're seeing

[00:26:39] of course it all happens at a time

[00:26:41] when office is having a tough time

[00:26:44] anyway with the interest rate change

[00:26:45] now all of a sudden nobody looks to be in a office

[00:26:48] and certainly downtown

[00:26:49] so this really affects

[00:26:50] those big downtown buildings

[00:26:52] and it's going to affect everything around it

[00:26:55] because if you don't have all those people

[00:26:57] going in downtown

[00:26:59] they're not going to go get that coffee on the

[00:27:01] corner market

[00:27:02] they're not going to go get that sandwich at lunch

[00:27:04] right so all the downtowns are going to

[00:27:07] feel this office crunch more than say the suburbs

[00:27:11] where you still need to get your hair done

[00:27:13] and your nails done and get your massage

[00:27:15] and there's things you can't do remotely

[00:27:18] so uh suburban office seems to be doing fine

[00:27:21] surprisingly retail seems to be doing fine

[00:27:23] you'd think that more and more people

[00:27:24] would just want to buy stuff online

[00:27:26] but retail seems to be okay

[00:27:28] again because all that money is

[00:27:30] circulating still $7 trillion

[00:27:32] people like to spend it storage

[00:27:33] you've got people

[00:27:35] in a situation where you guys know this

[00:27:37] better than anybody

[00:27:38] but they have to downsize maybe

[00:27:40] because life is more expensive

[00:27:42] because apartments are more expensive

[00:27:44] it seems to me that this would be a time

[00:27:45] that storage would be a popular thing

[00:27:48] and then industrial of course

[00:27:50] is still rolling along

[00:27:52] so that's my summary of

[00:27:54] but either way if you any commercial projects

[00:27:59] usually commercial loans are adjustable

[00:28:02] if you're on a more fixed one that's great

[00:28:04] but it could mean that as these payments

[00:28:08] adjust on commercial properties

[00:28:09] that investors or owners will have to put

[00:28:12] more capital into those projects

[00:28:14] because the banks are going to want to make

[00:28:16] sure that there's enough coverage there

[00:28:19] just as a review for anyone when you hear

[00:28:21] commercial real estate a lot of people think

[00:28:23] office just for anybody that's just

[00:28:25] tuning into the show commercial real estate

[00:28:27] encompasses multi-family office storage

[00:28:31] retail mobile home parks and again

[00:28:34] multi-family as well because some people think

[00:28:36] big apartment complexes that does fall

[00:28:38] under the umbrella of commercial real

[00:28:40] estate so just to clarify

[00:28:41] Kathy you are a wizard and a

[00:28:45] maestro of all this stuff right

[00:28:47] you're very sophisticated

[00:28:48] you've seen a lot you help people buy

[00:28:50] single-family homes you've done

[00:28:51] syndications and very extensive developments

[00:28:55] that's a massive wins boiling this down

[00:28:57] but you're also very good at educating

[00:29:00] someone who's just getting started right

[00:29:02] and reflecting on a quote that you said

[00:29:03] which is investing in real estate can change your life

[00:29:06] that was something that you said

[00:29:07] and when you think about like demanding

[00:29:09] career that an airline pilot has

[00:29:11] how can they make their first step

[00:29:13] into getting into real estate

[00:29:14] particular strategies or markets

[00:29:16] or things that they should consider

[00:29:17] starting with

[00:29:20] I love this question and one of the thing

[00:29:23] I'll start with things that you should not do

[00:29:24] because hopefully that will help

[00:29:26] yeah I mentioned before the show to you guys

[00:29:28] that I went to I spoke I was a keynote speaker

[00:29:31] at a doctor's conference

[00:29:34] and they were following a guru

[00:29:37] and this is what we've seen over the last few years

[00:29:40] there's a lot of people coming out of nowhere

[00:29:42] using social media to become instantly famous

[00:29:46] and they sound like they know what they're talking about

[00:29:49] so this was a room of really just brilliant doctors

[00:29:53] who have massive debt right

[00:29:56] and they are they devoted their lives to this career

[00:30:01] and yet they were trying to do something

[00:30:03] that they didn't know

[00:30:04] and put all the money that they made in the career

[00:30:07] that they do know and that they studied for

[00:30:09] and they worked hard for

[00:30:10] and all of a sudden being so reckless

[00:30:13] with that money on something

[00:30:15] that didn't understand and couldn't possibly understand

[00:30:18] in such a short period of time

[00:30:19] think about what it takes to be a pilot

[00:30:21] or a doctor or a dentist

[00:30:23] or the professional athlete

[00:30:25] but it's not overnight

[00:30:27] it's taken blood, sweat and tears right

[00:30:30] and then it's so easy to just give it away

[00:30:34] I'm pretty sure that a lot of the doctors at that event

[00:30:39] invested in people who did just didn't have the experience

[00:30:42] and now with rates going on

[00:30:44] I think a lot are hurting right now

[00:30:46] so the biggest thing is don't get swept into these gurus

[00:30:50] so to speak there that don't have the track record

[00:30:53] and the experience

[00:30:55] if you're going to hand your money over to someone

[00:30:57] make sure they have a track record

[00:30:59] that they've done what they say they're gonna do

[00:31:02] and believe me I'm saying this because

[00:31:04] I've made that mistake

[00:31:06] even I have invested with people who had experience

[00:31:10] but not specifically in the thing we were trying to do

[00:31:12] and I'll give you an example

[00:31:14] this might attorney actually told me

[00:31:16] to invest he said oh this is the best thing I've ever seen

[00:31:19] it's a wine village in northern California

[00:31:21] and you could be able to

[00:31:24] people are gonna stop it and want to taste the wines from California

[00:31:27] and the wine sellers

[00:31:28] are going to be able to have they're gonna pay a commercial price

[00:31:31] for this little tasting room

[00:31:33] so you're gonna get a higher per square foot rent

[00:31:36] so it made sense

[00:31:37] oh yeah instead of having to drive all around the mountains

[00:31:40] of California you go to one place and you taste the wine

[00:31:42] all these wine sellers will

[00:31:44] anyway bottom line

[00:31:46] too sexy too new

[00:31:48] too hard too different

[00:31:50] but we lost our money 100% in that deal

[00:31:54] because this guy had never done it before

[00:31:56] were there some successful wine villages yes

[00:31:58] had he done successful projects projects yes

[00:32:01] but we were the guinea pigs on this one

[00:32:04] so don't be a guinea pig

[00:32:05] that's the moral of this story

[00:32:07] you look at someone like you guys you do one thing right

[00:32:10] I do one thing I now I wasn't before but we either

[00:32:14] have the single-family rentals or we build that single-family communities

[00:32:19] that's what we do and and you guys you know you focus too

[00:32:23] and so just again be careful about that

[00:32:26] and and don't try this would be again be my

[00:32:30] if you're a pilot and you're making a lot of money and you're successful

[00:32:33] and you love your career

[00:32:34] don't try to also be an expert in real estate

[00:32:37] it's you can't it's not a side business

[00:32:39] it's a business and it needs to be treated like a business

[00:32:43] so you can't just dabble in it in my opinion

[00:32:45] so if you're busy working lots of hours

[00:32:48] and you still have family and health and other

[00:32:50] things vacation things you need to do

[00:32:53] then invest your money and somebody who is treating it like a business

[00:32:57] and has a track yeah and I'll say from personal experience

[00:33:00] like it took me 10 years to get to where I'm at

[00:33:03] and that was on my layovers I didn't go out

[00:33:06] I was a slam clicker as all airline pilots know

[00:33:08] and I went and grinded on my business and I did it on my days off

[00:33:12] and it was extremely stressful like it was a lot of work

[00:33:15] it wasn't something I just did on my days off

[00:33:17] it was something that it took a lot of time

[00:33:21] to get it to where it is today and I know take

[00:33:23] and it takes a special person tape

[00:33:24] I know does is grinding away too

[00:33:26] and it's not just something you just go oh yeah

[00:33:28] I'm gonna do this thing it's it is a

[00:33:30] and people a lot of people would always at least

[00:33:32] take I'm sure you get this all the time

[00:33:34] they would make excuses as to why I could do it

[00:33:36] and they couldn't do it but at the end of the day

[00:33:38] the difference was the grind the grit

[00:33:40] the time spent it takes a special personality

[00:33:44] and drive to be active so I'm glad you said that

[00:33:47] Kathy because that's very well available to me

[00:33:49] and we're a lot of good. And I also yeah

[00:33:51] and I also want to pull on this red debt

[00:33:53] it's boring oh yeah real estate is not an exciting

[00:33:57] investment category it is tried and true

[00:34:00] it's got the best track record of any

[00:34:03] and that's why we love it to be

[00:34:04] but we try not to be biased on this show

[00:34:06] we want to bring in every asset class

[00:34:08] we can possibly find but at the end of the day

[00:34:10] real estate has such an amazing track record

[00:34:12] but it's because it's very boring

[00:34:13] it moves like a cruise ship

[00:34:15] it's not going to get your heart rate up

[00:34:16] like cryptocurrency

[00:34:17] it's not going to get you rich overnight

[00:34:19] but it's tried and true

[00:34:20] and it should be boring

[00:34:22] if you're investing in a real estate project

[00:34:23] that's exciting

[00:34:25] it's probably not the safest bet

[00:34:27] yeah and again I made that mistake

[00:34:28] oh we've got a resort and Costa Rica

[00:34:30] I'm got like all these really sexy projects

[00:34:33] but they've been hard

[00:34:34] by the way because you dove into that

[00:34:36] with me on a webinar

[00:34:37] but that we did I don't remember

[00:34:39] was like three years ago

[00:34:39] we'll put that in the show notes

[00:34:41] where I actually go through

[00:34:42] five deals that Kathy's done

[00:34:44] and some of the successes

[00:34:46] and some of the

[00:34:47] less successes

[00:34:47] and how to do due diligence on an operator

[00:34:50] Kathy and I recorded a webinar on that

[00:34:51] so we'll put that in the show notes

[00:34:53] it was really good

[00:34:53] it was like an hour and a half long

[00:34:54] I don't know if you remember that Kathy

[00:34:55] but I did thank you

[00:34:57] yeah yeah

[00:34:58] we are so strict in our underwriting now

[00:35:01] but back then

[00:35:01] I would get swept into these

[00:35:03] exciting ideas and I held myself back on a surf

[00:35:06] those sound like a wave pool

[00:35:08] a town wave pool

[00:35:09] yeah we almost did that

[00:35:10] I just looked at Rich said no

[00:35:11] we can't do anything new or different

[00:35:13] or sexy ever again

[00:35:14] we're just doing the basics

[00:35:16] but to me real estate is sexy

[00:35:19] even though it's boring

[00:35:20] and it's exciting

[00:35:21] I was sitting down with some friends

[00:35:23] who were their financial planners

[00:35:25] and they wanted to look

[00:35:26] at what we were doing

[00:35:27] and why we were so heavily invested

[00:35:28] in real estate versus the stock market

[00:35:31] and they were they put us on what their plan would be

[00:35:34] and the typical plan is to save in taxes

[00:35:37] by putting getting an IRA or 401k

[00:35:40] and then investing that

[00:35:41] and then in 20 years or 30 years

[00:35:44] you're forced to take that money out

[00:35:46] and then you pay tax

[00:35:48] so you're not avoiding taxes

[00:35:50] you are just putting them off

[00:35:53] and so when he showed me this

[00:35:55] it was like in 20 years

[00:35:57] the amount of money we would have

[00:35:59] would be so much

[00:36:00] that when we're taking it out

[00:36:01] we're getting like you're not making less in the future

[00:36:04] I hope you're not making less than the future

[00:36:07] because there's inflation

[00:36:08] and your expenses are going to go up

[00:36:10] and everything's going up

[00:36:12] I kind of wonder if you're going to be paying more

[00:36:15] by putting it off in the future

[00:36:17] and that's again just looking at this

[00:36:19] financial plan they gave me

[00:36:20] was like yeah but in real estate

[00:36:23] we never have to pay the taxes

[00:36:25] if I like that a lot better

[00:36:27] because we can defer defer

[00:36:28] and if your audience doesn't know this

[00:36:30] they need to know

[00:36:32] that in real estate

[00:36:33] you can take tax deductions

[00:36:36] and depreciate your property

[00:36:37] even if it's appreciating

[00:36:40] and then when you pass away

[00:36:43] those properties step up at least current tax law

[00:36:46] to the current market value of the time

[00:36:49] and those taxes

[00:36:50] that you didn't pay that you deferred

[00:36:52] go away through the 1031 exchange

[00:36:55] so I can't find another investment that does that

[00:36:58] that maybe oil there's other ones I should look in

[00:37:00] but like I said I'm just going to focus on what I know

[00:37:03] but that just makes sense

[00:37:05] and then he said and I don't mean to

[00:37:07] the harp on any financial planner

[00:37:08] because I know you're doing good work

[00:37:10] and what we do isn't for everybody

[00:37:12] but one thing he said is hey do you want to

[00:37:15] set a science of money for your grandkids

[00:37:17] for their college

[00:37:19] and I thought so there's this plan you can do for that

[00:37:22] I said no I probably just rather buy a house

[00:37:25] and to just have that house pay red

[00:37:27] and the renter pays my loan off

[00:37:29] and that house will pay for their college

[00:37:30] because then I don't have to sell the house

[00:37:32] I just refinance and get the money

[00:37:35] college and so they still have it

[00:37:36] exactly

[00:37:37] yeah that's a good college education in itself

[00:37:40] and by the way if you're talking about this

[00:37:42] on the college planning episode

[00:37:44] go ahead and write

[00:37:44] no I was going to say and if you want more information

[00:37:46] about 1031 exchanges

[00:37:47] we just recorded Kyle Williams from velocity 1031

[00:37:50] on episode 52 so

[00:37:52] Kathy mentioned that sort of in passing

[00:37:54] but the whole concept of 1031s

[00:37:56] that was covered in episode 52 really well

[00:37:59] Kathy you have a really

[00:38:01] you had a really challenging personal situation

[00:38:04] and I believe Rich shared that story

[00:38:08] with our listeners and we want to listen to that

[00:38:10] Rich Vekki on previous episode talked about that

[00:38:13] but you wouldn't do some really challenging

[00:38:15] personal times at the end of the day

[00:38:17] but you still found success in real estate

[00:38:20] during that time emerging from that really challenging situation

[00:38:24] what advice would you have to our listeners

[00:38:26] or those pilots that feel like they have

[00:38:29] current financial or time constraints

[00:38:32] personal situations that make investing feel so out of reach

[00:38:37] what would be your advice

[00:38:40] I am a firm believer that we are here on earth

[00:38:44] to evolve

[00:38:46] believe that every challenge we get is here to make us better

[00:38:50] and to have a see something we wouldn't see otherwise

[00:38:54] for me that challenge was my the love of my life

[00:38:57] was told that he had six months to live

[00:39:00] when they discovered melanomaskin cancer

[00:39:03] he is fine today and the doctor was wrong

[00:39:05] but this was a shock

[00:39:07] obviously a complete shock

[00:39:08] we had two young children

[00:39:10] again he's fine

[00:39:12] what that did for me is have me say

[00:39:14] I don't I want he had gifted me this ability to be a stay at home mom

[00:39:19] and I didn't want to leave my small children to go find a job

[00:39:23] nine to five or eight to six or whatever it would be

[00:39:26] to take care of the family in the case the doctor was right

[00:39:29] I thought there's got to be a way to make money

[00:39:33] passively and I had heard about it

[00:39:35] I didn't know much about it

[00:39:36] I read Rich Dad Ward ad but

[00:39:39] I just it just forced me to go on this journey of understanding what is this

[00:39:44] thing so that was the turning point for me

[00:39:47] and I dove in and I happened to as I said I was

[00:39:51] in broadcasting I had a radio show in San Francisco

[00:39:54] and I just made that show all of a sudden I just pivoted to

[00:39:59] what is this thing and I started interviewing millionaires who were self-made

[00:40:02] millionaires who had achieved passive income

[00:40:05] and every single episode I'd be like what you're kidding me you can what

[00:40:10] let's just told you you could buy a property it triples in value

[00:40:14] and you don't have to pay capital gains tax when you sell it as long as you buy

[00:40:17] another one like that was mind blowing

[00:40:19] you can get your credit fixed you could borrow money

[00:40:22] sometimes at the time it was like 100 percent

[00:40:25] that you could borrow but you can still to boil it down challenge

[00:40:29] gives us the opportunity to really look or sometimes

[00:40:34] you're forced to look at something you would never look at

[00:40:37] otherwise and oftentimes it determines your future when you do that so

[00:40:42] take the time to really look at what is this challenge what is it trying to

[00:40:46] teach me and what are the steps I can take

[00:40:49] one of the first I just read a book on managing change

[00:40:52] I think it was caughter is the last name like managing through change

[00:40:56] and the first step and as a eight step process in managing change and you went

[00:41:00] through change right you have that you were faced with this six month

[00:41:03] to live change my life is about to very drastically change where

[00:41:08] my spouse is working and providing all the income sound familiar that's a

[00:41:12] pilot and that person is about to lose their income

[00:41:18] and then it's going to rely on the spouse that's at home

[00:41:21] and so that was the change and so the thing that you did was you acted with

[00:41:25] a sense of urgency out of necessity but that's the first step in managing

[00:41:29] through changes acting through urgency

[00:41:31] and so if you're listening to this and you're a pilot or a captain and you're

[00:41:35] the sole provider for your family I want you to ask yourself if you lost

[00:41:39] your medical on the next six month appointment what would you do

[00:41:43] because every six months we run the roulette of losing our medical

[00:41:47] and you're going to you want you want six months or a couple of months to

[00:41:51] act with urgency or do you want to act with urgency now so

[00:41:54] you know one of the best pieces of advice is I've got from an American

[00:41:58] Airlines captain when I was first starting my career I was 20 years old

[00:42:01] wandering around airport it's I had my CFI and I was doing the thing and

[00:42:05] I would just go up to random pilots and I was weird and just say hey do you

[00:42:07] mind if I pick your brain for a couple of seconds and I said hey what would

[00:42:10] you advice would you give to a 20-year-old like myself

[00:42:12] and one guy told me he said you better have a lot of irons in the fire

[00:42:15] because the economy and a furlough and changes in

[00:42:19] bases and your medical can ruin this career in a second

[00:42:23] in the turn of a dime you could have nothing

[00:42:25] and but hit me hard when I went to my first my second regional after being

[00:42:29] furlough in six months I want my first airline it was like oh we're going to

[00:42:33] be a captain in no time at all and all the next

[00:42:35] the orders were cancelled airline was bankrupt and I was furlough

[00:42:39] I went to my next airline and I walked in the door and there was a 59-year-old

[00:42:42] in there who had just been at the same airline for 20 years number five guy

[00:42:46] kids in private school laid off in the same class as me at a regional

[00:42:50] making 20 grand a year so guys this is in gallons this is real right what happened

[00:42:54] to Kathy can happen to you so that's why we have this show right when we

[00:42:58] we don't want to steer you in any particular direction just give the bandwidth

[00:43:01] to thinking about how you can take action and what that might be and this is

[00:43:06] a great first step so thanks for sharing that Kathy but another question I

[00:43:09] had really like pilots are gone right they're on the road

[00:43:14] what kind of real estate investments would you recommend that require minimal

[00:43:17] day-to-day oversight yeah that's what we specialize in at real wealth because

[00:43:21] I'm from San Francisco Bay Area where most of our early members at real

[00:43:25] wealth were tech workers and they have a very high salary but they work 80

[00:43:30] hours a week and they oftentimes own properties in the San Francisco Bay Area

[00:43:34] that were negative cash flow so it was really easy for me to help them to say

[00:43:40] you have a property where the million dollars is bringing in two thousand

[00:43:43] dollars a month is not great you could 1031 exchange it into something far

[00:43:48] better that is professionally managed

[00:43:50] that is newer and has much higher cash flow so that's

[00:43:55] that is one of the things that we've helped a lot of people in that situation

[00:43:58] where they're just too busy and all over the plane not people are

[00:44:03] travel internationally I'm sure you guys do so owning properties that cash flow

[00:44:10] that are newer that are professionally managed

[00:44:14] that's that's what you got to do don't try to self-manage don't try to fix

[00:44:19] inflict don't listen to any of that stuff you cannot fix and flip you can't do

[00:44:23] burr you can't do the you don't need to there's a lot of real estate that's for

[00:44:28] people with no money and you need to be looking at the stuff for people with

[00:44:32] money and understanding that so the asset protection that tax benefits

[00:44:39] it's a very different investment so you could just cut out all of those books

[00:44:43] on flipping author development anything hands on you don't have time for

[00:44:48] and you're gonna be making me Kathy because I've done it yeah I've done it I've done it oh yeah

[00:44:54] yeah I've I've done bird yields six times zones away and trying to manage contractors from how

[00:44:59] to go I can't imagine I still own it haven't made much money on it but it was a real headache

[00:45:04] and it still is this is why I transitioned to passive investing six years ago six seven years ago

[00:45:09] now I went to a real estate conference and met some syndicators and was like wait a minute you

[00:45:15] mean I can just pass off the day to someone else and you're gonna offer it yeah do all the work

[00:45:22] all the heavy lifting you're a professional that does this day in and day out just like an airline

[00:45:26] pilot and I keep 70 or 80 percent of the profits yeah this is a no brainer so I've come a 100

[00:45:32] percent and we did buy a physical property last year but it would brand new build and I think

[00:45:36] that is such good advice because there it's such a good way to frame it there are tons of real

[00:45:41] estate deals for people with no money and if you don't have any money then yeah you need to be

[00:45:46] rolling up your sleeves and get your hands dirty and then maybe swing in a few hammers but

[00:45:50] if you're an airline pilot if you don't need to be doing that you shouldn't be doing that it's not

[00:45:54] the best use of your time we talked about that all the time right and I but pick up a green slip

[00:45:58] or a double time a premium trip exactly for time and a half or double time that is so much better

[00:46:04] so much of a better use of your time than trying to learn how to tile a bathroom

[00:46:09] and unless you love it unless you love it yeah that's that crazy you love it it's to have a

[00:46:16] house in every layover and oh I think I got the house three and I was like nope not doing this

[00:46:19] anymore Kathy I got a question for you so for we have a wide range of experience levels in our

[00:46:25] listener group but for the people that are just getting into this trying to understand real estate

[00:46:30] on a more holistic level you probably have a bunch of great resources for those people can you

[00:46:36] recommend for somebody who's got a little bit of a feeling of overwhelm what are some resources

[00:46:41] they can dig into to to better understand real estate from a holistic perspective so they feel

[00:46:46] more confident and comfortable getting into it well that is why I created real wealth.com to offer

[00:46:53] this information like my passion is increasing financial intelligence especially when it comes

[00:46:59] to real estate so we have over 500 webinars I think that still could be overwhelming but

[00:47:04] we have lots of free webinars and articles and blogs to help I also wrote retire rich with rentals

[00:47:11] to release simplify the process of investing in passive one-to-four unit homes where how to find

[00:47:18] the market how to again make it very turnkey and passive for you and buying newer is one of the

[00:47:23] ways because are you buying old house well it is not passive even a new house is impassive we're

[00:47:28] in a fairly new house and I feel like everything's breaking but just wait Kathy husband is named Rich

[00:47:33] so retire rich with rentals in a comma and there is his critical right you're just trying

[00:47:38] he picked that title and I thought wait a minute what about me retire rich with rentals is very

[00:47:45] very simplified version of how to invest in in a one-to-four unit homes and that's to me still a great

[00:47:53] great thing to do it's pretty passive not 100% but you can get up to 10 fanny Freddy loans fixed rate

[00:48:00] loans stays fixed your loan stays fixed while you while your rents go up over time and if you're in

[00:48:07] growth markets that's what we specialize in is getting in front of where the growth is so that

[00:48:12] you just buy this thing your property manager manages it for you and if it's in the right place

[00:48:17] it's going to go up in value over time while your tenants paying down your loan and while you're

[00:48:22] getting these tax benefits I love that and then with syndications I think it's what we talked about

[00:48:28] just making sure that whoever you're handing your money over to whoever that is is a professional

[00:48:35] company that they're not just a couple of people that want to do their first deal with you that

[00:48:40] you can do that if you want in a tight turn out student pilot deals right yeah yeah you're gonna fly

[00:48:46] are you gonna fly with the student pilot hopefully you can as long as there's a senior pilot next to

[00:48:50] him right they may have a great Instagram thing that shows them flying sesna's but they're not really

[00:48:57] experienced as underselling I think the the opportunity to buy one to four units she's not saying

[00:49:04] go find a random house and search forever and try to figure it out on your own. Kathy has a really

[00:49:09] well-worn playbook on going into markets that are trending in the right direction hand picking

[00:49:17] those markets and finding somebody who has operated over 300 or 400 what your minimum is but like

[00:49:25] hundreds of homes partnering with that person who has a well-oiled machine of managing rentals

[00:49:33] and then helping you buy in that market with a very seasoned operator and a very attractive

[00:49:41] market that is trending in the right direction so she's not saying go do this on your own like

[00:49:45] she's providing a platform in which helping you guide that and if you're gonna I'm telling you

[00:49:51] if you're gonna experiment with single family rentals I can tell you from experience doing it on

[00:49:54] your own is not fun and I also will agree if it's not new good luck because everything is gonna have

[00:50:01] you rip the roof off you rip the water heater out the appliance is there's no warranty and you can

[00:50:06] go on and on impossible if you're just doing it on your own thank you thank you for saying that

[00:50:11] isn't want to self-promote but that is what we do we work with professional athletes who don't have

[00:50:16] no time and people live in another country they can't do it so that we just hold your hand make it

[00:50:22] easy for you. Kathy I really wanted to thank you for coming on to the show we've been really

[00:50:25] generous with your time and appreciate you sharing your resources how do people get in touch with

[00:50:30] yeah you can go to realwealth.com real as in real estate and wealth as in your money realwealth.com

[00:50:36] and retire rich with rentals is my book you can get on amazon and of course the real wealth show

[00:50:41] is my podcast and the real estate news podcast as well. Thank you so much. Kathy for coming on and

[00:50:47] giving our listeners something to think about and thank you to our listeners who have tuned in

[00:50:51] and to make the show possible and we'll catch you on the next episode. Thank you so much.