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510: Garage Real Estate, Minted Not Printed
About this Episode
Learn how garages and parking areas add value to property. Find out how to earn more rent for your garage space.
Adding a garage to a rental doesn't fetch much more rent income. But you will rent your place faster and tenants stay longer.
To get more rent for a detached garage, rent it to an off-site tenant.
The future of parking and garages is positioned to be shaken by autonomous cars. Fewer people will need to own or park cars.
Meet me in-person at the next New Orleans Investment Conference. It's November 20th - 23rd, 2024. Register here.
Brien Lundin joins us. He is the host of the world's longest-running investment conference, the New Orleans Investment Conference. He's also editor of Gold Newsletter.
He & I discuss inflation, interest rates, real estate, and gold.
Gold is up 20%+ annually. This is because foreign nations, like China, are beginning to prefer to own gold rather than US debt.
There's a case for interest rates to go higher, another case for them to go lower.
Brien tells us why he believes the gold price will keep rising.
Increasingly, asset values are positively correlated—real estate, stocks, gold, crypto, oil, and even collectibles.
Personally, though I don't see evidence that gold builds wealth, history shows that it's a good place to store wealth.
Meet me in-person at the next New Orleans Investment Conference. It's November 20th - 23rd, 2024. Register here.
Resources mentioned:
Meet me in-person at the next New Orleans Investment Conference. It's November 20th - 23rd, 2024.
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Complete episode transcript:
Keith Weinhold (00:00:01) - Welcome to GRE! I'm your host, Keith Weinhold. Learn about garage real estate, how garages and parking add value to your property, and how to get more rent for the garage. Then we go from micro to macro. As we talk about the enduring value of a real asset that's minted, not printed, and another chance to meet me in person today and Get Rich Education.
Robert Syslo (00:00:27) - Since 2014, the powerful get Rich education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate, investing in the best markets without losing your time being a flipper or landlord. Show host Keith Weinhold, who writes for both Forbes and Rich Dad Advisors and delivers a new show every week. Since 2014, there's been millions of listeners downloads and 188 world nations. He has A-list show guests include top selling personal finance author Robert Kiyosaki. Get Rich education can be heard on every podcast platform, plus it has its own dedicated Apple and Android listener.
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Keith Weinhold (00:01:29) - Welcome to GRE! From Saint Augustine, Florida, to Saint Paul, Minnesota, and across 188 nations worldwide. I'm Keith Weinhold, and you're listening to get Rich education as we cover a component of property that's a little talked about, garages and we're a real estate investing show. You learn about ways to optimize the rent income that a garage can produce for you, too. Now, if the home that you currently live in has a garage, it could be the entrance to the home that you use even more often than your own front door. That's how important and useful it's become. And understand that garages on homes, they didn't even exist until about 100 years ago, because that's when cars began to become popular. The emergence of the garage in American real estate is one reason for the downfall of the big front porch. You rarely see big porches on modern homes.
Keith Weinhold (00:02:26) - Interestingly, some of America's most successful companies began in garages, places where you have workbenches and can tinker around with things. Google and Nike were launched in garages, and it's also where people store lots of things, sometimes so many things that they can't even get their car in there anymore. In fact, the word garage comes from the French garage. Spell that g a r e r meaning to store. But yeah, when cars became more popular in the 1920s and 1930s, that's when you begin to see garages. And then as cars got larger, garages got larger. And by the 1960s, as families began to own not just one car but 2 or 3 cars, garages became larger again, and a three car garage is pretty common today in a single family home, though it's rarely that big in a property that you're going to rent out. Now, if you've got a single family home and it does not have a garage and you want to make a garage addition. Well, you can only expect to recoup 65 to 80% of what you've spent.
Keith Weinhold (00:03:40) - So it is a money loser. Then it really doesn't make sense to add one to a rental, perhaps only your primary residence, since you get the benefit of using it yourself that way. And if you add a garage to a rental, you know you just really can't get that much more in rent for it. It's usually not worth it, although the financials can look better for a carport addition instead. Now, if you've got a rental with the garage rather than without one, it actually can help you get your place rented out faster. But a tenants really not going to pay you even as much as 10% more in overall rent in most every case. Yet see, what happens is that a tenant, they tend to fill up the garage with stuff, and therefore they tend to stay longer than if there were no garage. A garage is one reason that single family rentals see longer tenant durations then apartments. Now, if your property though, if it's in a built up area and there's little on street parking, oh well then the addition of a garage that could have more of an impact on the value of your property than it would out in the suburbs.
Keith Weinhold (00:04:53) - The garage does not count toward the square footage of a property because that's considered unfinished space. And your prospective tenant? They might not know that fact about the square footage. So that's something for you to keep in mind when you're advertising a home with a garage for rent. Now, older houses, they're more likely to have a detached garage is its own separate standalone structure that's built near the house. But you would have to walk outdoors in order to get from the house to the detached garage. In fact, the home that I grew up in and that my parents still live in in Pennsylvania has a detached garage. Their home was built around the year 1915, so more than 100 years ago, and my parent's garage also didn't have an automatic garage door opener for most of my life. I remember the big yank up that you'd have to make on the heavy door. So when my mom was about to back out of the garage when she was going to take me somewhere, what I would do is I would stand outdoors until she backed out so that I could open and then close the door by hand and then get in the car.
Keith Weinhold (00:06:06) - Gotta get those legs under it and enjoy one deep squat there, Well, one reason that old houses have garages often detached from the rest of the home is for risk of gasoline explosion. That's because back 100 years ago, gas was stored in the garage because gas stations were yet to be invented. So you've got this trail of detached garages left behind in older neighborhoods, and some people still prefer a detached garage. Now there's a way for you to get more rent income if you're renting out a single family home with a detached garage, and this isn't always going to be feasible based on how the property's set up. But the way to do it is for you to get an off site tenant to rent your garage. Oftentimes, the renter of your single family home, you know, they just don't have as high of an income as someone does that lives in an upper crust neighborhood that might have a lot of toys to store their, be it a boat or an antique car, or even an RV, perhaps.
Keith Weinhold (00:07:13) - Well, that off site renter in the better neighborhood, you know they're going to pay you to store their cars or their other stuff in your detached garage In that case, your rental home and garage would have two separate tenants, and you will enjoy more overall rent income than if one tenant was renting both the home and the detached garage. So what you really want to learn is you do your research though, is what laws cover the renting of a garage or a storage space because they typically fall outside the jurisdiction of landlord and tenant laws. But you need to verify that depending on your state or your area. Sometimes running a garage is the equivalent of renting a warehouse space, and the rules can be different when it comes to payment issues or other problems. And when you realize that some garages can even have dirt floors, you can see how different it is than a living space. Now, even if you're thinking about renting your garage to an offsite tenant. Most of the time making garage upgrades, it's just really not worth it.
Keith Weinhold (00:08:19) - But note that I said most of the time. On the other hand, if you can make it marketable, maybe you need to do something smaller, like add an automatic garage door opener if it doesn't have one, and then you'll have to run the numbers to see if that is worth it. Now, one mistake that I made out of property, it wasn't that first ever seminal fourplex that I owned, but the second fourplex that I owned there in that building, each tenant had a small, simple one car attached garage, and then as each four plex unit went vacant, I went in and painted the inside the walls and ceiling of all four garages with a fresh coat of paint, and I would learn later that was not a good use of my time. It didn't help me get any more in rent. No tenant is really even going to stay longer for fresh garage paint, but frankly, I'm just not a handyman. I don't know how to fix anything. So one of the few ways that I knew how to add value, I thought was rolling a paintbrush over the inside of garage walls like I know how to paint and not much else replacing a faucet.
Keith Weinhold (00:09:29) - Whoa, that right there. We're getting into, like, intimidating territory. Okay for me. In any case, duplexes in fourplex, they can often have garages, especially newer ones. And I think I mentioned to you here on the show before that I once owned an eight plex. It was a little quirky. It had a small single attached garage that was kind of on the end of the building. So eight units and just a one car garage. And actually this is a good example because those tenants, they paid about $1,500 for their unit, so none of them could really swing it. None of them could afford to pay an extra $400 for the garage. So again, the way to solve that is rent to a more affluent off site tenant. That's what I did. And I got 400 bucks. Now, understand something. When you're driving a neighborhood or you're looking on Google Maps, at times it can look like a home has a two car garage because you're only looking at the widths of the garage door.
Keith Weinhold (00:10:29) - But that can really be a three car garage because on one side, the garage bay goes two cars deep, so you can't always tell how many cars a garage can hold just by looking at the width of the garage door. One reason that developers in Hoa's actually like garages that are too deep is that way. The driveway is more narrow. When driveways are more narrow, that means there's less asphalt and more green space in neighborhoods. Now, in some places, it doesn't matter too much if the garage is full of stuff and you have to park in the driveway, but in a cold, snowy place, it really helps to park cars inside the garage. So garages are typically more valuable to residents in areas that have real winters. In an apartment building, it can help to have assigned spaces for tenants. When I bought apartments, I've always loved it to my property manager to figure out the space assignments and rental property. Upgrading and resurfacing parking areas is another money loser. Now, we don't want to be slumlords, but the truth is repaving and re striping a parking lot that might look nice.
Keith Weinhold (00:11:44) - You might do that. but the reality is that it will get you practically zero extra rent. Not a good ROI. Well, that's a take on garage's past and present. What about the future of garages and parking areas when it comes to the future? And this harkens back to episode 13 of this show. Yes, that's when I discussed driverless cars, also known as autonomous cars. Back in January of 2015, nine and a half years ago. Well, when autonomous cars become popular, which many expect will still happen, it's likely that fewer people are going to own cars at all. They will just have a car subscription. The autonomous car will pick you up and drop you off, and more people will convert their garages into living space like another bedroom. If that does indeed eventually happen. But autonomous car adoption has hit roadblocks since episode 13 of this show back in 2015, and that's generally because autonomous cars keep having accidents. Although Waymo is perhaps the one company that's made more headway lately, you're seeing their autonomous taxis in use in some cities right now.
Keith Weinhold (00:13:03) - Currently, a car spends 95% of its life being parked, but garages, parking lots, and parking garages are all poised to be less useful when fewer people own a car. Instead, these autonomous cars are just going to drop you off, pick you up, and then constantly stay moving. Stay out on the road rather than park at all. EVs are a factor here to electric vehicles. They can be thousands of pounds heavier than the average gas powered vehicle, and experts out there are warning that the extra weight from EVs that could cause older parking garages to collapse unless steps are taken to buttress those structures. I mean, that's a problem. If geotechnical and structural engineers didn't design EVs on older parking garages decades and decades ago parking lots, they have definitely fallen out of favor among some, but they are still building lots of them. Critics say that to have to build minimum parking spaces on new projects, well, that hinders new housing construction, and also encourages people to drive rather than take public transit parking lot.
Keith Weinhold (00:14:18) - Critics. They also argue that parking lots and garages, they fill up precious urban real estate with these sort of soulless, concrete eyesores, making cities more sprawling and less convenient. And you tend to see this more in cities west of the Mississippi River. In the east, you have more cities on gridded street patterns that are more dense because they were laid out and developed before cars took over and sprawled so many cities, but with as many changes that autonomous vehicles could bring to the parking world and make things like car ownership less important and car parking less important, I sure would ask a lot of questions before I invested in any sort of parking related real estate. Today we've been talking about real estate in the micro so far today. Garages and parking surely will pivot to the macro as we discuss an asset that's minted not printed. That's next. I'm Keith Weinhold, you're listening to episode 510 of get Rich education. Listen to this. Hey, you can get your mortgage loans at the same place where I get mine at Ridge Lending Group Nmls 42056.
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Robert Kiyosaki (00:17:08) - This is our rich dad, poor dad author Robert Kiyosaki. Listen to get Rich education with Keith wine old and there is I respect Kate is a very strong, smart, bright young man.
Keith Weinhold (00:17:26) - It's terrific to welcome into the show a man with decades of investment analysis experience that we can learn from. He's the executive editor of Gold Newsletter, and you might know him as host of America's longest running investment conference, the famed New Orleans Investment Conference. Hey, we haven't shedded in a minute. Welcome in Brien Lundin.
Brien Lundin (00:17:48) - Right? To be able to keep it has been a while too long.
Keith Weinhold (00:17:51) - That's right. And now you and I each span the real asset world. I'm a real estate guy. You spend a lot of your work in teaching over there on the gold side. And we both intersect with the general economy. And, you know, Brian, I think of the general economy is having a number of abnormalities.
Keith Weinhold (00:18:11) - Is it always does, but actually many normality to I mean, I've commented that there's actually relative normalcy in the fed funds rate and even mortgage rate levels. If you look at it historically, also home price appreciation rates, in rent appreciation rates, they're all close to historic norms, although the aberrations are probably more interesting to talk about. What are your thoughts on the economy's general direction?
Brien Lundin (00:18:37) - Yeah, you know, it really is weird. We think about today's interest rates and how high they are. And throughout human history, the natural level of interest rates have hovered around 6%. That's kind of what it's always been for thousands of years. So what we went through over the last 16 years or so was a really abnormal period, and even going back a decade or so before that. So yeah, it looks seems like interest rates are at normal levels. What is at abnormal levels, however, is the level of debt that we have today. And and that's been created after over four decades of ever easier money, ever since Volcker killed off inflation in the 1970s and started lowering rates, we see that whenever there was a recession, the Federal Reserve had the same prescription every time it lowered interest rates, and then it would try to raise them back, but could never get past the midpoint of the previous range before another recession would come back, or the markets would throw some kind of a fit in.
Brien Lundin (00:19:40) - The fed would then start easing again. And if you look over time, if you plot or draw a line at the bottom of every one of those interest cutting cycles, see that those bottoms of the cycles get progressively lower and lower. Till 2008, they hit zero. And then they tried to normalize it got up to 2.5% on the Fed's funds fund rate, and then had to go right back to zero at Covid. So the lesson to me is that things might seem normal if you look at the grand sweep of history, but they're anything but normal right now, and the debt loads that we have are so high they preclude anything resembling a normal interest rate. And in fact, my contention is that interest rates have to be below the rate of inflation. In other words, the currency has to depreciate at a faster rate than you're paying interest on these debts, or the whole house of cards collapses. So that's actually, while not good for the fiscal health of the US or other developed economies, it's actually good for the kind of tangible assets, real assets we are talking about real estate, gold, silver, monetary metals, even commodities.
Brien Lundin (00:20:52) - And, you know, everything across the board as far as tangible assets.
Keith Weinhold (00:20:56) - Yeah, we look at the long term history of interest rates 5 to 6% if If you go back hundreds of years or even thousands of years is a historic norm. The fed funds rate is now at about 5.3%. But yeah, I think what you're talking about is we seem to have a decreasing tolerance for what are really normal rates. Nothing abnormal about the rate. All that was abnormal was the rate of increase. And you know, one thing that I think about with the economy, Brian, that maybe people don't talk about enough. Is this labor shortage that we have? I mean, it is difficult to do get anyone to do my landscaping. Last year I stayed in a hotel where when I checked in, there was no human being at the check in desk. It was automated checking. Then last month, I stayed at a hotel where there was a human at the front desk, but they told me that there was not going to be any housekeeping during my state.
Keith Weinhold (00:21:46) - So the reason that I bring this up is that a chronic labor shortage that spells entrenched upward pressure on inflation, because you have to offer higher wages to lure in workers and higher wages paid mean higher consumer prices, higher rents, more inflation and persistently high rates to combat that.
Brien Lundin (00:22:07) - Yeah, absolutely. And you bring up a whole nother factor that very few people consider as demographics. You know, the fertility rate in the US is below the replacement rate. It's about 1.7 now, and it would have to be like 2.1. And as they say, demographics is destiny. We're not the only ones by any means. Japan went over the demographic cliff long ago. We're following all the other developed nations are as well. And in 20 or 30 years the global population will be falling. That brings about a lot of other pressures and real estate. Obviously you have, you know, the baby boomers are going to be downsizing if they can find something to move into. Besides a retirement home, had a decent mortgage rate.
Brien Lundin (00:22:50) - You know, we have so much overhang in real estate that's sitting out there and locked up by the current interest rate. So yeah, it's an interesting dynamic we're in right now. And personally I think it's all just a result of the Federal Reserve and all these other monetary mavens whose PhDs I want to pull all these levers on the economy. And they have unintended consequences in every one of the policies that they undertake. And we're in one right now.
Keith Weinhold (00:23:20) - We've got both inflation and a scarce supply of property that just keeps floating property values higher despite higher mortgage rates. And one place that the high inflation is often reflected is in the price of gold. Gold is up more than 20% year over year. And one thing I want to ask you about here, with regard to gold and the fact that we have this debt that you brought up earlier, Brian, is a real problem. When we look outside the US, the world's biggest economy is by far China. China has been dumping US treasuries, meaning basically that they're no longer buying our US IOUs so they no longer want our debt.
Keith Weinhold (00:23:59) - And instead, China and other nations are increasingly parking it in gold. Now, is that one of the reasons that gold has surged?
Brien Lundin (00:24:07) - Yeah, it is the primary reason. Or, you know, one of the primary factors why gold has surged this year in particular. And it's a weird mix of buying. This year. We saw the gold price start taking off like the 1st of March. And it was for the first six weeks or so. It was literally a relentless rise, not a down day. Setting new price records every day. And it took us a while to try and figure out or to figure out where the buying was coming from. And as it turns out, it was the result of continued buying by central banks renewed buying to an even greater degree by the people's Bank of China, and also some domestic demand from China. And that's something we had never seen before. We'd never seen Chinese investors and savers buying gold on the way up in a price trend. They usually bought on a price downtrend trying to get a bargain, but now they were following the price up.
Brien Lundin (00:25:06) - So that contributed to everything and the factor that we had expected that did not come about in the first half of the year was a fed pivot. You know, if you look back in December, yeah, the markets are pricing in 5 or 6 fed rate cuts in 2024. And that kept getting postponed. And that was expected. I expected in most of the other analysts expected the beginning of fed rate cuts to really drive the price up higher, but it kept getting postponed. That big factor is still ahead of us. I think the markets are going to start pricing that in in a couple of months. And so what all that central bank buying and Chinese buying is done is while we were waiting for the fed to pivot in that big factor, it went ahead and added $300 to the gold price and got us into a new trading range so that when the fed pivot does hit, we're lifting off from a much higher level. So it's a good time, I think, to be an investor in gold and related assets.
Brien Lundin (00:26:07) - I think it's also a good time to be involved in real estate and a lot of other tangible and real assets, as.
Keith Weinhold (00:26:13) - Well as real estate investors we are interested in that interest rate direction. And, you know, if the US is continually finding themselves in a position where they're wondering, well, hey, if not China and others will, then who in the heck is going to buy our debt? And now you? I think the listener you can ask yourself in the same way, if you're trying to get your friends to give you a loan, How do you entice your friends to give you a loan? You would offer them a higher interest rate in order for them to give you a loan. So with that in mind, Brian, is that what the US has to do in order to entice foreign bondholders in the same way, meaning then debt rates would tend to be held high?
Brien Lundin (00:27:01) - Very interesting point there, Keith, because getting back what I was saying, how these PhD economists are pulling all the levers on the economy, the lever they're about to pull is to start lowering rates again, because they recognize these debt loads, they recognize the possibility of a recession, and that if there is a recession and tax receipts fall, then the debt load is going to accelerate even further.
Brien Lundin (00:27:26) - So they feel that policy right now is very restrictive. And they're going to start lowering rates at some point. They have to. But the debt loads being what they are, however you have on the other hand, the bondholders are, which you would hope would be the buyers of the Treasury securities, and they will look and see the potential economic slowdowns. They had the potential for higher inflation and start demanding higher returns on their yields. So there is a tension there. We saw that develop last October, November timeframe and a few months ago when we saw Treasury yields rise at the same time that the dollar index rose versus other currencies and gold was rising, which was a weird kind of strange bedfellows there that typically gold does not rise when interest rates are rising and the dollar is strengthening. But they were all going up together, and that happened a bit last fall as well. To my mind, that is a reflection of safe haven buying. You know, typically we think Treasury yields fall when they're safe haven buying because everybody's going into treasuries.
Brien Lundin (00:28:36) - To me that was reflective of safe haven buying because the markets were really concerned about the fiscal future for the US and other developed countries. So they were going to the safety of the dollar, the safety of gold and demanding higher yields on treasuries. That would be more commensurate with the kind of inflation rate that they saw ahead. But it's been a weird mix of buying a weird mix of economic developments, and I think it all argues toward big money getting more and more into gold because of the uncertainty that lies ahead, and the really the extraordinary nature of the current economic situation to the world we find ourselves in now.
Keith Weinhold (00:29:21) - I did not realize that there is less sensitivity to higher gold prices until I just learned that from you a few minutes ago. So that's really interesting about potential momentum in the future price of gold. And we talk about the future price of gold. We think of that through a supply and demand lens, much like we think about what's moving real estate prices today. Have we hit peak gold, meaning that there's less and less of it to pull out of the ground?
Brien Lundin (00:29:49) - All of the trends in that respect actually favor gold and that we have reached peak gold production as around 32,300 tonnes a year.
Brien Lundin (00:30:00) - Interestingly, a third of that level is being purchased now by China between the people's Bank of China and Chinese citizens. So a good bit of that is taken off. But I'm not a big proponent for the validity or the impact of supply and demand for gold, because it is monetary demand that really drives the price of gold. It has no utility, virtually no utility and industry. It is purely a monetary metal. So when people are concerned about the future purchasing power of the currency, they buy gold and they drive the price up, and that buying on the margin really sets the price of gold. And I think we're about to enter one of those periods where gold really plays catch up for long sweeps of time. You'll see the gold price doesn't do much until something happens. Things get bad to a certain degree where people really start to worry about their purchasing power, and then gold makes a huge catch up move. Really, in the early stages of that kind of a catch up ketchup move, I believe.
Brien Lundin (00:31:06) - I think we're entering a period that would be akin to the 1970s and the 2000, where the price of gold has historically gone up anywhere between five and a half and eight and a half times over during these kinds of secular bull markets. And I think we're in one of those periods right now.
Keith Weinhold (00:31:25) - Five and a half to eight x.
Brien Lundin (00:31:27) - Yeah. If you look at the fact that there's only been three bull markets in gold since 1971, when it actually became, you know, an investable asset or commodity and not money. So 1970 to 75 was a bull market of 76 to 1980 with a bull market. And really, 2000 to 2011 was another bull market run. And each of those instances, each of those three bull markets, gold went up from 25.6 to 8.2 times from the lows. And this market we're in now, the low is about $1,040. So if the price of gold goes up trading 5.6 and 8.2 times, you're talking about 6 to $8000 gold price at the end of this cycle, wherever and whenever that takes us.
Brien Lundin (00:32:17) - And of course, you know, we're up around 2300 and change right now. So that's a good move ahead. Lots of potential. And it's not just where the price of gold goes, but all the associated assets worth it, like mining stocks and the like are going to do, I think, very well over the next few years.
Keith Weinhold (00:32:36) - Yeah. People know gold is the classic inflation hedge. But to your point, it has a lot to do with catching a wave. If you think the real long term diminished purchasing power of the dollar is 3 or 4% over time. Well, you don't see gold go up gradually at 3 or 4% per year for several years. You tend to see it do little or nothing, and then it has this big catch up phase, like those periods of time that you talked about. When we talk about physically holding on to gold, you know, it's cool. It's one of those type of investments where if you do hold it yourself, there's no login or password to access your goal that is physical, intangible.
Keith Weinhold (00:33:10) - And you know, Brad, one thing that a lot of gold people often talk about is a positive attribute to holding gold is that it has zero counterparty risk when it's yours. No one can take it from you. But does it really have no counterparty risk? Because I think about if a person wants to hold physical gold, well, if they outsource it to a third party vault or a bank safe deposit box, then the counterparty risk is there. But if they hold it onto themselves and store it in their own home, which I don't know if that's a good idea, but if they choose to do so, well then the counterparty risk is the thief. So I think gold is a great way to store wealth, but is there really zero counterparty risk associated with gold?
Brien Lundin (00:33:48) - Well, from that standpoint, there's never a zero risk. There's never a zero risk. When you step out of your door in the morning, either, you know, there's always some risk. You can mitigate the risk. And it reminds me of of what I tell people when they're really new to the sector is there are two reasons to buy gold.
Brien Lundin (00:34:04) - One is as insurance and one is as an investment. And insurance is what you need to worry about right away because you're insuring against something you know is going to happen. If you feel like 3 to 5 years, the dollar's purchasing power, it's going to be much less than it is today. I think we can all agree in most likely is then by buying gold today, you lock in today's value of the dollar because gold will make that up, and perhaps even more so, it will protect you against that depreciation. So you can ensure your wealth by holding some physical metals. And I think that's the most important thing you can do, at least initially, is get silver and gold. Now, as far as storing it, a lot of people can store enough gold in their house to gain a good bit of insurance against whatever their wealth is. And by that, you know you will have to invest in a safe. Don't tell anybody about where it is and a good alarm system. And if you haven't and a location where you have a good police force, then you're talking about 20 minutes that somebody's going to get in your home before the police come and knocking, and hopefully they can't find the safe, much less get into it in that amount of time so you can do it in your house to some degree.
Brien Lundin (00:35:16) - You can store it elsewhere, but there are important considerations there. They're very respected storage facilities and the like. You don't want to store it in a bank because one of the things you're insuring against is a bank holiday, thanks to like you to store it there either, but you can find respected institutions to store it. I recommend people don't put all the eggs in one basket and store it with a number of institutions, or as many as they can practically do. But yeah, it is important to own the metals, you know. Otherwise you're going to lose from here. On the day that you decide not to buy gold and silver to protect your wealth from that day on, you're accepting a rate of purchasing power depreciation that we know is considerably more than what the government says it is, and is historically high to begin with.
Keith Weinhold (00:36:09) - I generally think it's a good idea to own at least a little gold if you have trepidation about buying gold. Think of it this way in a way you're not buying gold, You're transferring some of your prosperity over into gold, which has had lasting value for millennia, across cultures and across generations.
Keith Weinhold (00:36:28) - And for some reason, I think a lot of people my age and younger that they don't own any gold. I would imagine that 90% plus of people, I think the statistics are out there. 97% of Americans don't own any gold. And maybe you feel like you don't understand gold and you don't want to own what you don't understand. But you could purchase this a 10th of an ounce of gold for under $300. And you know, by buying just a little bit, you begin to get a vested interest in this stuff. So with that in mind, Brian, how much do you think one should allocate and in what form should they make their purchase?
Brien Lundin (00:37:02) - It's interesting. There have been studies for many years showing that the highest risk adjusted return you can get in a diversified portfolio with about 5% of your wealth, or your investing portfolio allocated to go to heaven. Those same studies done that are indicating more like 10% or more. It's to the point that you sleep well at night, whatever makes you comfortable.
Brien Lundin (00:37:27) - But you know all of those studies back test it and they look back and see how gold and a portfolio meshes with the six, the classic 6040 mix of stocks and bonds etc.. But what we've seen over the last 12, 14 years is that post the 2008 great financial crisis is that all of these asset classes have become more and more positively correlated because everything's dependent on the Federal Reserve and monetary policy. So all of the correlations have started to trend toward one, where they all rise and fall together in unison. Because everything, again, is just depends on monetary policy and the flow of liquidity from the Federal Reserve and other central banks. So that fact alone argues for even a greater holding in gold, because all of that portends greater and greater inflation, greater monetary accommodation, and the kind of thing that gold insures against. So the way to look at gold as insurance is not quite like home insurance. You know, you buy home insurance, you pay the premium every year in case your house catches on fire.
Brien Lundin (00:38:38) - But you really don't expect your house to catch on fire. With gold. You're buying insurance. You're paying the premium, perhaps just once, and you're insuring against something that you know is going to happen, that the purchasing power of your dollars are going to depreciate. So if you have a significant cash balance in accounts, you might as well put it into precious metals and lock in the current rate before it gets the purchasing power of the dollar depreciates even further.
Keith Weinhold (00:39:06) - That is a good point with gold as money insurance from the standpoint that with your homeowner's insurance and your landlord's insurance policy, you need to pay a premium annually. You potentially only need to pay that once upfront when you purchase your gold, and there's typically a spot price differential to overcome. Well, Brian, you are the host of America's longest running investment conference, which is founded on championing American's right to own gold. The New Orleans Investment Conference. It really feels like there is a touch of prestige when you're there. I can speak to that personally because I've attended it at least three times in the past.
Keith Weinhold (00:39:47) - It's coming up in November. I hope to attend again this year. You've got some illustrious speakers there. Tell us about this year's New Orleans Investment Conference.
Brien Lundin (00:39:58) - Yeah, it is our 50th anniversary. You know, I think it's the oldest investment conference in the world today and longest running. And we do have that legacy, that prestige of being somewhat gold oriented. We're actually covering a good bit more real estate lately, but we really cover a lot of the macro picture macroeconomics. We have some of the leading thinkers come to our vet every year and a great audience as well. Very highly qualified, very successful investors. This year is up 50th. So we have another wonderful roster of speakers. We have Jim Grant coming, George Gammon, James Lavish, Danielle DiMartino Booth, Britt Johnson, Abby Gilbert, Adam Taggart, the list goes on and on. Rick Rule, Peter Boockvar, dozens and dozens of top minds. And, you know, we kind of alluded to it in this talk, but these are really strange and interesting and dangerous, extraordinary times that we're living through right now.
Brien Lundin (00:41:02) - And it is amazing to me, having been in the business for 9 to 40 years now, seeing these kinds of periods come and go. And it seems that when they do happen, we get this kind of underground media that arises, and people who really bring in losses come to the fore to comment on what's going on and provide really valuable insights. And after all the years I've been in this business, I know who really contributes value, who the best thinkers are, and I'm getting them all to come to New Orleans. As I have to say, I'm a big fan of all of our speakers. I think they are absolutely extraordinary, and we are so confident that you will find our event to be worth many times the cost of attending, that we have a money back guarantee. If you don't think it does, if you don't think it's worth many times what you paid for, we'll give you registration feedback. So it's very few events that can offer a guarantee like that. And I think you would agree with me that you have to be there to really experience it.
Brien Lundin (00:42:07) - And it really is just an extraordinary experience.
Keith Weinhold (00:42:11) - Yeah, I can't imagine anyone not getting a multiple on their investment with attending the conference. You know, one thing that you do really well there at the conference, Brian, besides just listening to all those speakers that you just mentioned, you also have panel format discussions where sometimes you can learn more when you're listening to a conversation than you can when you're listening to a presentation. You have both choices there. Then if you prefer you want to break, you can go across the hallway to where the exhibit hall is and do some learning and meeting people over there. And then you also have these breakout sessions where you go upstairs into small rooms and learn from presenters in just the niche that you think most interests you or that you want to learn more about. So there's really good variety there.
Brien Lundin (00:42:54) - Yeah, it's kind of a time tested format. It's different than most conferences you'll find out there, but it's worked well for us for 49 years, and our attendees seem to appreciate the unique format that we have and the ability to learn.
Brien Lundin (00:43:09) - And it really is information almost overload. There's so much of value from these speakers. If you are intellectually curious, if you are a serious investor, if you enjoy an intellectually stimulating environment in a destination location, this is really the place for you. And you know, I can go on over and over again for as long as we have time for and more to say talking about it. But the best advertising we do are people who word of mouth from people who have come. And I would encourage anyone who is considering coming to the New Orleans Investment Conference. Number one, this is our 50th anniversary. It's going to be a very special year. But number two, find somebody who's been before. Talk to them about it. And I think you'll get excited about attending this year.
Keith Weinhold (00:43:56) - Each year it is at an excellent location. It's at the New Orleans, Riverside Hilton and Bryan Terrace, those November dates for the event and then how one can attend.
Brien Lundin (00:44:07) - Yeah, it's November 20th to 23rd this year, so it's the week before us Thanksgiving week.
Brien Lundin (00:44:14) - So it's it doesn't interfere with that holiday. It's kind of a good little slot there. And people can learn more by going to one New Orleans conference.com. Very simply New Orleans conference.com.
Keith Weinhold (00:44:29) - All right. It's been great catching up on the state of the economy, real estate inflation, interest rates, gold. And thank you so much for putting on this terrific conference for the benefit of every interested investor. It's been great having you back on the show.
Brien Lundin (00:44:43) - Wonderful to talk to you again, Keith, as always.
Keith Weinhold (00:44:52) - Oh, yeah. Bright, inarticulate thoughts from Brian, as always, when he and I discussed those related factors of inflation and interest rates. I mean, this is such a germane discussion because, like he brought up, there seems to be this increasing propensity for all asset classes to rise or fall together. Like nearly every asset class is near an all time high right now. I'll need to research the incidence of this some more so that it's not just anecdotal, but the Fed's decisions. They seem to increasingly float up or knock down just about every investment class almost simultaneously.
Keith Weinhold (00:45:35) - Real estate stocks, gold, crypto commodities, collectible toys, even nearly everything. And when you're a real estate investor, you are already investing in commodities and metals, and you have direct ownership of those. Now, not so much precious metals in your real estate, but we're talking about items that are built into it, like aluminum and steel and copper. They probably exist in your properties. Well, their prices go into the replacement cost of your property, and they are a reflection of your real estate portfolio's overall value, too. Coming up here on future episodes of the show, it will be the inaugural appearance of the King of Commercial Real Estate here on the show. Also, there seems to be still a mainstream aversion to all debt types, and I suppose it finds me in the position of being real estate's debt proselytizing. Well, coming up on the show, I am going to ask and answer the question for you is any debt worth paying off? Which debts are good to pay down? Which stitch should be paid off, and which debt types do you want to keep, and which debt types do you actually want to get more of? What are the exact distinctions so that you know right where to draw that line on all the debt types that you hold on to.
Keith Weinhold (00:47:00) - So coming up here on the show, is any debt worth paying off? And I am pleased to tell you that if you would like to meet in person, yes, you're going to have a chance to do that at the special 50th anniversary of the New Orleans Investment Conference. Now, I'm not sure that meeting me in person really brings any benefit to you or the event, but yes, I am attending in person in New Orleans. I haven't been there since 2021 and I want to return. Brian London really knows how to put on an event. There is a lot of macroeconomic talk there and you will hear more about both that and gold than you will about real estate, although I expect plenty of real estate investing information there as usual. Again, it's November 20th to 23rd, four plus months away. And the registration link that you can use for this is in today's show notes. I will also get it into the next newsletter for you. Big thanks to the wise and wonderful Brien Lundin today. Until next week, I'm your host, Keith Weinhold.
Keith Weinhold (00:48:03) - Don't quit your daydream.
Speaker 5 (00:48:09) - Nothing on this show should be considered specific, personal or professional advice. Please consult an appropriate tax, legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own. Information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of get Rich education LLC exclusively.
Keith Weinhold (00:48:37) - The preceding program was brought to you by your home for wealth building. Get Rich education.com.
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