Real Estate, Millennials and Money
Wendy Sweet (00:04):
Hi, I’m Wendy sweet and I’m Bill Fairman. We are so glad to have you back with us today. We are going to talk about, gosh, the largest transfer of money is about to happen, right from, yeah. Yeah. Well that’s true. It could be real estate, right? It’s gonna. It’s going to go from the baby boomer generation, which you and I qualify for and it’s going about to the millennial market now and it’s really interesting. Some of the opportunities that are going to be out there or the millennial’s, you know, they’ve talked, they talk so much about how in debt they all are from college loans, school loans, you know in our, in our area in Charlotte, we have one of the largest concentration of millennial’s here and their median income is, is huge fpr people that age and they, they don’t always buy houses. They, they like to stay in apartment complexes still so that they can get up and go. They like the tiny house thing. They liked the experience of life and an experience. That’s what they really spend their money on is more like experiences where the baby boomers tended to invest in things, whether it’s collectibles or you know, cars or, or gold and silver or real estate or whatever that might be. So it’s interesting to see what’s kind of coming down the pike.
Bill Fairman (01:36):
Well, we have a whole generation of people that are, used to live in as a minimalist and a lot of them saw their parents, not necessarily the grandparents or other friends parents that owned homes went through the crash. They ended up having their homes foreclosed on and they don’t have anything to do with them. True black Swan event. No doubt. Right. The things that happened in the, in the crash and a lot to do with the speculation, the people that bought homes that didn’t really care that much for the home, but they knew that if they held onto it for a certain period of time, they could sell it and make a quick profit. So they were struggling to make those payments cause there’s a little more than they can afford. House rich. Yup. House rich and cash poor. And it really wasn’t, designed to their lifestyle or taste. So they didn’t really have their heart in it. And then when the values went down, it was really easy for them to walk away.
Bill Fairman (02:54): One of the things I always teach people in our real estate groups is that if you have income producing property, the house, and here’s my saying, the house doesn’t care how much it’s worth because the house isn’t based on it. It’s sales price. It’s based on how much income it can earn. One of the things that, and it’s a shame because the vast majority of millennial’s are waiting much longer to own homes if they, if they want to own them at all. But we know many investors who started off as very young people bought a duplex one side to live in for themselves. Yeah. And then they rented out the other side for them to have their entire mortgage paid for. Right. So they’re living over here for free or at very discounted amount while the other person took care of that mortgage for them.
Bill Fairman (03:59):
And then later, and this is, this is what always happens through life. Your income starts to go up. Perhaps you find a spouse end up getting married, you need more space, right? You’ve got equity in that home, you typically sell that home, you take that equity and then you move it to the next home and you just keep getting bigger. Well what if instead of taking that equity, selling that home, taking that equity and moving, you refinance that house, take that equity and use it on a down payment for a new house and now you ran out the other side and now you’ve got income,
Wendy Sweet (04:37):
right? Right. You’re, you’re cash flowing cause you’re making more than that payment.
Bill Fairman (04:42):
And next house you buy again. You never sell that one, you just buy the next one. Right. And we know people that have 40 to 16 doors and a lot of that was started by being very young and just continuing to buy that next home, but never selling the old home and keeping it as a rental property.
Wendy Sweet (05:02):
Right. Well what’s going to happen though, when these millennials are getting that big cash transfer or wealth transfer from their, their parents. It’s kind of like winning the lottery and a friend was telling us that he was just looking at, well, the story about the last 10 lottery winners and where are they five years later? Well, they’re, they’re back on welfare, food stamps and retakes that they’re just not taking care of the money they get. So what’s going to happen when they get this transfer of wealth? What? What? What are they supposed to do?
Bill Fairman (05:37):
Well, the first thing that I would do is get a posse.
Bill Fairman (05:43):
Get 4 or 5 people and just walk around and saying, yes,
Wendy Sweet (05:45):
yeah, that sounds good. And you have to pay stuff for them. That’s right.
Bill Fairman (05:54):
What would be your other option? First and foremost, it depends on the type of wealth that’s being transferred. If it’s a, if it’s a solid asset, if it’s stocks, bonds, just make sure you find a good money manager that you currently have it. Maybe it’s the person that’s currently holding the account or managing it. You can talk to them about different, different options. Find someone else who is wealthy and taking good care of it. It’s funny, I noticed the difference when younger people go to a wealth manager and they go to these offices where there’s mahogany on the walls and marble on the floor, all these expenses, they’re like, I’m paying these fees so you can make your office opulent. Do you really need this? And it turns a lot of people on. But you don’t want to go to somebody who’s operating out of a trailer either, right?
Bill Fairman (07:00):
There are funds that you can get into that are real estate related, that you know the, the fees are pretty low. It’s stuff you understand. If you had a mortgage yourself or know someone who has, right? You have to understand that real estate is always going to go up. It’s not always going to go up in a straight line. Okay? People need two things in any economy, right? They need a roof over their head and they need food. That’s right. So if you’re going to invest, in my opinion, and this is something that Warren buffet talks about it, you invest in something that you know and you use. So most of what Warren Buffett invested in or housing cause he owns. Yeah, it’s mobile homes. He got that Berkshire Hathaway real estate. He’s got another real estate company. I can’t remember the name of it, but it’s a high dollar one.
Bill Fairman (08:04):
Uh, he owned the mobile homes. Yeah. And he also finances those mobile homes. So he’s in food because he is invested enough. Oh, you’re big name brands, right? Proctor & gamble, all of those. And housing. Notes. He does notes and yeah. So he’s been very successful and he’s done it over time. It’s not, you know, a get rich quick thing. And that’s what you need to think about when you’re investing this money and don’t go out and start buying a bunch of crap. Right. You don’t need. You want to take it. It’s okay to, that charger. It’s okay to reward yourself. Yeah. Okay. But you need to take, you can take the majority of that money and continue to keep it invested because, okay. Uh, over time number one, you’re going to need it. Now most, most financial advisors teach you that there’s a particular number you need to retire and your job is not to die before you run out of money.
Bill Fairman (09:12):
Once you retire, right, you’re going to get to a certain certain income level that you can live off of the money that that number has and your job is not to die before it finishes. But well as you know, we’re all living longer. So how long is enough? My suggestion is to find something that pays you an income and never touches the balance and allows that income to continue to go up. And I don’t know anything other than real estate that you can do that on a consistent passive income, notes, seller financing, all of that. So as a young person, and especially if you’re not an acredited investor, that means $1 million in net worth or greater not getting your primary residence is a, there are smaller funds that are called A regulation funds. We call them Reg A+. So they’re Regulation A+. They are not quite as stringent as publicly created stock, but they have almost as many regulations involved.
Bill Fairman (10:17):
But you can invest small amounts of money. I have 10,000 and still be in the same real estate space that we’re in. There’s plenty of companies out there that will, that have an example through crowd funding where they’re making a loan on a piece of property, they open up that loan to other investors to put money in. Then you can invest as little as you know, five $10,000 at a time, so there’s, there’s plenty out there. I’d like to give a shout out to BiggerPockets. They’re an online forum. It’s education only and there’s plenty of people there that can help you figure out, places to put money and strategies again no one’s selling anything on there. It’s strictly education. Yeah, good information. Yet a good mentor as well. One of the posse has to know what they’re doing and like I said, it’s okay to splurge it out again, I know you, I know you guys like to do experiences, but you don’t have to experience Bali. You can experience the Bali hotel if you need to. That’s right. It took, it took the people that pants down that well, a lifetime to make it, you’re not going unless it’s listen, unless it’s millions and millions of dollars, treat it the same way. You’re parents, the person that pass it down to you.
Bill Fairman (12:00):
There’s an unknown, well, not, not unknown. It’s a lesser known statistic that by the fourth generation, most of your wealthiest families in the country are completely broke. That’s right. That’s right. Well, only one of the Rockefellers still has, wealth in the family, did you know that? No. Yeah. So learn that tidbit yesterday. Oh, good for you. I’m just picking them up everywhere. But there’s plenty of strategies to continue to build wealth over time through, through families and keep the wealth and continue to grow well. We’ll get into one later. We’ll have a, a friend of ours that’s in the whole life cash value policy. We’ll have him on the show Chris miles, right? Yup. Yeah. And he’ll, he’ll talk about how the family offices, the Rockefellers continued to build that well over time by utilizing the whole life, uh, in cash value insurance policy to continue that.
Bill Fairman (13:07):
Yeah. Now don’t get me wrong, there are plenty of people that are, I’ve had wealth passed down to them over time. It had been very productive and help grow it. But typically you always have a nerdy wealth there too. That’ll end up just, you know, sucking off part of that one off. Never to be seen again. I’ll open up a CBD oil branch. That’s right. But anyway, I hope that was helpful. Keep your eye on it anyway. Don’t flout the wealth. Uh, utilize it to invest in. Get a good mentor. That lottery house. I won a lottery and now I’m going to find my million dollars.
Bill Fairman (13:48):
Watch it. I see the commercials for it. Well, under what you’re talking about. So that shows I’m saying it to you. All right. So anyway, enjoyed having you here. Thank you so much. Don’t forget to subscribe like, and[inaudible]
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Bill Fairman (14:36):
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Wendy Sweet (15:21): Please.