ARE YOU MAKING MONEY WHILE YOU SLEEP — OR LOSING IT ?
By Eddie Speed
Legendary investment guru Warren Buffett said , “ If you don ’ t find a way to make money while you sleep , you will work until you die .” But in today ’ s real estate world , lots of people are losing money while they sleep . Talk about waking up in a bad mood !
IS YOUR NET WORTH SHRINKING ?
Many people are seeing their net worth getting hammered in today ’ s economy . There are lots of reasons why , but here are three :
You ’ re invested in a segment of real estate that ’ s sputtering . Many earning projections on segments that have performed well in previous years are now preceded by minus signs instead of plus signs . If you ’ re heavily invested in commercial , multifamily , or selfstorage , you know what I ’ m talking about — especially if you ’ ve tried to get financing for a new project lately . Lots of banks have put the brakes on new loans for these categories because the ROI is so pessimistic .
You ’ re a landlord with rents declining and expenses going up . Rent varies by market , but across the national average , monthly rents have declined slightly while insurance and repair costs keep going up . A typical landlord only makes a NET profit by beating the “ 50 % Rule ” to keep expenses down to half the rent check . Today , that ’ s a challenge ! ( Not to mention how much you spend on aspirin from dealing with tenants .)
High inflation is making your earning potential go backwards . I highly recommend a great book by my friend Dr . David Phelps . His title says it all : Inflation Is the Silent Retirement Killer . Since 2020 , inflation has gone up roughly twice as fast as personal income . When people get an annual raise that ’ s less than the inflation rate , they ’ re going backwards on the ladder of financial
success . Many traditional investments like CDs are paying less than the inflation rate ; so the dollars you take out will buy less than when you put them in .
When the Federal Reserve opens their Inflation Fighting Toolbox , there ’ s only one tool clanging around inside : Raise interest rates . They ’ ve vowed to keep rates high until inflation drops to 2 %, which is a long way off . That ’ s bad if you want to borrow money from a bank — but what if YOU were the bank ?
NOW IS THE TIME FOR YOU TO BE THE BANK !
Traditional lenders have tightened up the money supply . Credit availability is about half what it was four years ago . There ’ s a money supply shortage !
You know what happens when there ’ s an oil supply shortage — the price of gas skyrockets . We moan and groan when we fill our tanks while folks in the oil business are grinning eartoear ! You never hear them complain about high gas prices ! Well , when there ’ s a money supply shortage , people who borrow money have to pay more , but people who lend money can charge more .
Rent varies by market , but across the national average , monthly rents have declined slightly while insurance and repair costs keep going up .
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