Latest / Financial Survival Network / Real Estate, AI, and Inflation Collide - Lon Welsh #6278

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Real Estate, AI, and Inflation Collide - Lon Welsh #6278 · Financial Survival Network

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  Speaker 3: Well for real state.
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  Speaker 1: It is because the biggest component of the consumer Price
• 0:04
  Speaker 1: index is housing, because for most families, housing is their
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  Speaker 1: biggest household expenditure by far. So historically, rents and home
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  Speaker 1: prices track along with inflation. They do lag a little bit,
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  Speaker 1: but you know over time they will always catch up.
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  Speaker 3: And welcome. You are listening to and watching the Financial
• 0:48
  Speaker 3: Survival Network. I'm your host, Carrie Let's back from a
• 0:51
  Speaker 3: month of play in Europe and in Asia, but not
• 0:57
  Speaker 3: really play. I got to admit I worked way more
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• 1:34
  Speaker 3: in the subject and it's kl at carrie lets dot com.
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  Speaker 3: Soln Welsh is with us now, Lan real estate been
• 1:43
  Speaker 3: in it for quite some time, You've got your take
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  Speaker 3: on it. We talked to a lot of real estate
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  Speaker 3: people here, and the interesting thing is, as different as
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  Speaker 3: your approach might be, all of you are kind of
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  Speaker 3: on the same wavelength, the same path. I don't know
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  Speaker 3: if that's because it takes a certain kind of personality
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  Speaker 3: to do real estate, or if after you've been in
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  Speaker 3: in a while you kind of wind up doing the
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  Speaker 3: same things. What's your thoughts, Slot.
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  Speaker 1: I think it's a little bit of both. To work
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  Speaker 1: in commercial real estate, you need to have a good
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  Speaker 1: financial orientation and a real love just for the product.
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  Speaker 1: So I think that kind of takes the audience in
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  Speaker 1: the windows it down. And then with a small group
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  Speaker 1: that are in it, you know, they end up talking
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  Speaker 1: to each other quite a bit, so probably reinforces a
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  Speaker 1: lot of the patterns.
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  Speaker 3: Right, So Okay, real estate investing. There's no other area
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  Speaker 3: of investing that I've found where there's as many winners
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  Speaker 3: as there are in real estate. Whereas you go into crypto, yeah,
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  Speaker 3: like you could be a major winner, but there are
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  Speaker 3: a lot of losers there. You go into the market,
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  Speaker 3: and the market's the market. You know, it's all timing,
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  Speaker 3: which nobody knows how to do. But real estate doesn't
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  Speaker 3: work that way, does no.
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  Speaker 1: I think most people approach real estate with a multiple
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  Speaker 1: year horizon with their investment idea versus crypto and stock.
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  Speaker 1: Sometimes people have a very short term focus, and the
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  Speaker 1: shorter of the time horizon, the more important your timing becomes.
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  Speaker 1: If you're in real estate for a long time, it's
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  Speaker 1: really hard to lose money.
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  Speaker 3: Yeah, if you can stick out the down periods, which
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  Speaker 3: are infrequent but crash every seventeen years, right, yeah, something
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  Speaker 3: like that. So so, like you know, I seen the
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  Speaker 3: There was a guy who wrote a book called The
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  Speaker 3: Real Estate Investing Cycle. Okay, but I can't remember his name,
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  Speaker 3: but I did get the book. It was very difficult
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  Speaker 3: to get it because it was out of print. But
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  Speaker 3: it's written like forty years ago, and it's always the
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  Speaker 3: same like I'm here in Florida. We got international money,
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  Speaker 3: then we have a crash, everyone runs for the doors,
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  Speaker 3: and then it's the local guys, you know, the local
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  Speaker 3: speculators that start to perceive value, and then it gets
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  Speaker 3: built up and you start getting institutional and then when
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  Speaker 3: the party's almost over, guess what you get the international
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  Speaker 3: crowd in again. Yep? Is that your experience?
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  Speaker 1: Yeah, that's definitely I think what the cycle looks like
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  Speaker 1: if you're an internationally driven market. So I live in Colorado,
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  Speaker 1: so some of our ski resort towns are attractive to
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  Speaker 1: international buyers, and it's a very similar to what you described.
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  Speaker 3: So what's the worst deal you ever made in real
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  Speaker 3: estate law? Oh?
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  Speaker 1: Gosh, we bought an office building in Houston about six
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  Speaker 1: months before COVID.
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  Speaker 3: That we were going to renovate and we are timing there.
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  Speaker 3: What's a total disaster.
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  Speaker 1: So now that was actually my first fund that I
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  Speaker 1: did with a lot of other limited partners. So we
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  Speaker 1: had one really great investment in that fund and one
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  Speaker 1: really terrible one they averaged out fortunately.
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  Speaker 3: Yeah. Well, the average of life and death is being
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  Speaker 3: a zombie, right right? All right? So now where this
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  Speaker 3: cycle is getting old because look two thousand and eight,
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  Speaker 3: seventeen years ago. Is this time really different or are
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  Speaker 3: we going to have a crash.
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  Speaker 1: At some point, you know, on the real estate side.
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  Speaker 1: I don't anticipate we'll have a crash on the residential side.
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  Speaker 1: And the reason is that home prices have gone up
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  Speaker 1: so much, so fast, that there is a lot of equity,
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  Speaker 1: a record.
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  Speaker 3: Amount of equity.
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  Speaker 1: If you take a look at two thousand and seven,
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  Speaker 1: In two thousand and eight, incomposite, the value of all
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  Speaker 1: the mortgages in America work greater than the value of
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  Speaker 1: all the real estate home all the homes in America,
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  Speaker 1: So coluctively, we're all under water by a little bit.
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  Speaker 1: This time it's the other way around, with a huge
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  Speaker 1: amount of equity. Interestingly enough, about thirty eight percent of
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  Speaker 1: the homes in America don't even have a mortgage at all.
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  Speaker 3: That is interesting, and so a lot of cash buyers.
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  Speaker 3: Is inflation dead? Is doge going to kill? Inflation? Is?
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  Speaker 3: Obviously any asset holder's greatest friend within reason is inflation.
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  Speaker 1: Right Well, for real state it is because the biggest
• 6:07
  Speaker 1: component of the consumer price index is housing. Because for
• 6:11
  Speaker 1: most families, housing is their biggest household expenditure by far.
• 6:15
  Speaker 1: So historically rents and home prices track along with inflation.
• 6:19
  Speaker 1: They do lag a little bit, but you know, over
• 6:21
  Speaker 1: time they will always catch up.
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  Speaker 3: Okay, so let's let's talk about inflation. Will Rogers once said,
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  Speaker 3: invest in inflation. It's the only thing going up. And
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  Speaker 3: certainly in the past seventeen years, the real economy has
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  Speaker 3: been lagging, but real estate i e. Inflation has been
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  Speaker 3: going up.
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  Speaker 1: It has, So what will happen next to the inflation
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  Speaker 1: is probably really contingent on how fast we can wrap
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  Speaker 1: up the tariff negotiations.
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  Speaker 3: We're going through right now.
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  Speaker 1: So hopefully that'll come to a favorable conclusion with a
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  Speaker 1: lot of the countries and we'll see things died out
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  Speaker 1: a little.
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  Speaker 3: That you know what. I am glad you raised that
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  Speaker 3: point because I have actually written a little scream about it,
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  Speaker 3: and I just have to find it here if you'll
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  Speaker 3: be patient with me. Sure, let's see. Uh yeah, I
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  Speaker 3: didn't post it yet in the sub stack, unfortunately, but
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  Speaker 3: let me see if I can find it. I know
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  Speaker 3: it's here. Well, I'll just tell you the premise of
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  Speaker 3: it here. It's like all these countries want to make
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  Speaker 3: trade deals with the United States. Right. Interesting thing is
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  Speaker 3: that it's not like it used to be. Basically, trade
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  Speaker 3: deals would take you know, forever, because they were a
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  Speaker 3: giant grift because you had all these diplomats. They get
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  Speaker 3: to they get to stay in five star resorts. They're
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  Speaker 3: having you know, chateau truth with all their meals, they're
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  Speaker 3: having it with breakfast. I mean, it's a grift on
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  Speaker 3: the taxpayer's dime. And they get the incentive is not
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  Speaker 3: to make a deal when you got all these grifters.
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  Speaker 3: And that's not just the United States, this is the
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  Speaker 3: whole world here a lot, you know. But now with AI.
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  Speaker 3: And believe me, if there's one thing the current admind
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  Speaker 3: knows how to do is use AI probably better than anyone.
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  Speaker 3: You just feed in a trade deal, you tell it
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  Speaker 3: to find and you feed it into a model that
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  Speaker 3: specializes in international law, shipping, logistics and tariffs and everything else.
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  Speaker 3: You feed the current agreement in there and say show
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  Speaker 3: me every way we're getting ripped off now, and then
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  Speaker 3: five minutes later it tells you every where you're getting
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  Speaker 3: ripped off, and then another five minutes later, it's got
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  Speaker 3: your completed agreement here for your signature. You know, prime
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  Speaker 3: Minister u Arnie or whomever right and take it or
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  Speaker 3: leave it. And so it's not going to take months
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  Speaker 3: or even years to do these things. This is the
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  Speaker 3: mindset of the media, the legacy media, and really it's
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  Speaker 3: a narrative that just isn't true.
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  Speaker 1: Yeah, I'll be interesting to see if we can get
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  Speaker 1: through this a lot more rapidly because of the tools
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  Speaker 1: like you mentioned, should really enable these people to think
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  Speaker 1: through the process a lot faster, I certainly hope. So
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  Speaker 1: the uncerturinity is not helping out the markets a whole
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  Speaker 1: lot at the moment.
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  Speaker 3: Yeah, it trust me on this. It's going to happen,
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  Speaker 3: you know. The uh it's just nobody quite gets it.
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  Speaker 3: But but we get it right, We definitely get it here.
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  Speaker 3: So all right, so the tariff thing, once that goes away,
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  Speaker 3: what's going to happen.
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  Speaker 1: Well, we had seen a pretty consistent trend with the
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  Speaker 1: consumer price index declining on a very gentle slope over
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  Speaker 1: the last twelve eighteen months.
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  Speaker 3: I'm not an.
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  Speaker 1: Inflation next for by any means, but just from what
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  Speaker 1: I read in the Wall Street Journal every day, So
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  Speaker 1: hopefully this will be a blip and we'll get back
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  Speaker 1: on track with the things declining. One of the components
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  Speaker 1: of the CPI Consumer Price Index that have been propping
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  Speaker 1: it up was home prices. But we're seeing that the
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  Speaker 1: rate of home price appreciation is slowing down. Rent growth
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  Speaker 1: has slowing down over last year, so that'll certainly be
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  Speaker 1: an assist to the inflation rate coming down as well.
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  Speaker 3: All right, So you a buyer a seller? Oh, we're
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  Speaker 3: a buyer.
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  Speaker 1: There's a lot of really great opportunities out there in
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  Speaker 1: the market right now.
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  Speaker 3: All right. I like it and I tend to agree
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  Speaker 3: with you, believe it or not. And all right, how
• 10:35
  Speaker 3: do we find you? How do we connect with you? One?
• 10:38
  Speaker 1: You can go to Irtoncapital dot com. I R O
• 10:41
  Speaker 1: N t o N Capital dot com And actually we've
• 10:43
  Speaker 1: got a book on passive investing we can make free
• 10:46
  Speaker 1: for your audience. So yeah, Iretoncapital dot com forward slash
• 10:51
  Speaker 1: Financial Survival I believe.
• 10:53
  Speaker 3: Yeah.
• 10:53
  Speaker 1: So that should be really easy to remember.
• 10:55
  Speaker 3: All right, and that link will definitely be in the
• 10:58
  Speaker 3: show notes this interview on Financeial Survival Network dot com.
• 11:02
  Speaker 3: So make sure you click that link so Lon knows
• 11:04
  Speaker 3: we're sending people to them and get the book. And
• 11:09
  Speaker 3: if you have any questions for lon myself, shoot me
• 11:11
  Speaker 3: an email klatcarrielts dot com. Well you're at at sign
• 11:16
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• 11:19
  Speaker 3: now more on the way. Really appreciate you coming on
• 11:23
  Speaker 3: with us a lot. And hey, I guess we're going
• 11:26
  Speaker 3: to find out who's right and who's wrong over the
• 11:28
  Speaker 3: next three to six months.
• 11:30
  Speaker 1: Right, I think we'll know a lot more in three months.
• 11:33
  Speaker 2: Thanks for listening to Carrie Lets's Financial Survival Network, your
• 11:37
  Speaker 2: solution to today's trying times. For the latest, go to
• 11:41
  Speaker 2: Financial Survivalnetwork dot com. Financial Survival Network now more than
• 11:47
  Speaker 2: ever