Phoenix housing boomed with the housing market and then crashed hard with the subprime mortgage crisis. Now things are looking up again in the state. It seems as though when the national markets go up, Phoenix goes higher, and when they go down, Phoenix goes lower..
This makes Phoenix one of, if not, THE best place to invest in real estate. You can buy properties for cheap when the market is rough, then rent them for amazing cash flow and tax breaks, all the while riding it out to realize some significant gains from appreciation.
Phoenix is volatile, but for the cash flow investor, that’s good news!
Phoenix rental rates are up 18% in the last 12 months, making it one of the greatest places in the nation to invest in cash flowing real estate! Couple this with the fact that Arizona continues to grow with education across the valley as well as being one of the premiere retirement spots in the world as baby boomers are approaching retirement and rapidly moving towards Phoenix. Values and rental rates are increasing along with a greater demand for rentals, as unfortunately, foreclosures still plague the state.
I haven’t been very social lately. We’ve had the playoffs….the playoffs….ummmm…..the NBA Playoffs… Go CELTICS!!
Oh and we’ve been selling a TON of houses!!
Silver has been falling. “Sell in May, and go away.” So they say anyways, we’ll see. It’s an election year and we know that Central banks are trying to prop up the dollar as long as possible. We’ll see if we see QE3 after the election and a skyrocket in silver pricing tho.. The USD (US Dollar) is higher than it has been in over a year at over 82.
Facebook has gone public!
Many people think that when there is a stock IPO(Initial Public Offering) that it’s the first time people can buy stock. That’s not actually quite accurate.
It IS the first time the general public can buy the stock. But before the general public can invest, accredited investors get their shot first, and at a much lower price! To be an accredit investor, you have to meet certain criteria that the SEC sets out. Basically this means that the wealthy get an advantage with investing..No surprise!
Facebook stock opened up near $40, and it is now below $30.
Facebook shares dropped 10% today at a drop of over $3.
Many people are saying the IPO for Facebook was overvalued. Those who claim this might talk about how Google has 10x the cash flow of Facebook and 10x the strength on their balance sheet. What Facebook has now over Google is social usage. Google is working on that, but they got in late.
But here’s the thing: When a stock goes public, it is meant to benefit the company!! They make money by selling shares.
Facebook is smart and finds a way to do smart things. Zuckerberg is simply not your average CEO. There is something different to Facebook. It has swag. Facebook continues to adapt and integrate with other platforms. This is why I was wrong 2 years ago when I said Facebook was on the verge of falling to other platforms like wordpress and blogger.(right before my parents got on Facebook!) hah!
Will I invest in Facebook? I dunno…
With real estate, I can control my investment.
If Facebook keeps dropping, I can come up with a lot of fundamental analysis to support getting in. But I just don’t know…
What I can tell you I definately will buy more of if it keeps falling, is silver. I promise you I’ll pick up on that. I forecast QE3 after an election and more devestation to the European Union shooting the price of silver up.
If you want to follow Facebook as a company daily, and you commit yourself to a solid education in stocks, you can make money in Facebook. This way, you can make money whether Facebook stock goes up, goes down, or goes sideways.
But whether it’s Facebook stocks or any other investment, do your homework and don’t trust the BROKErs.
Following the trends of the past 2 years, March saw a significant increase in the number of sales that closed compared to the prior month in Phoenix. Last month saw an increase of 22.1% over February. That followed a 12.6% increase in the prior month. The number remains impressively high in light of the continued shrinking inventory.
For buyers and investors in Phoenix, this means that competition for homes continues to be very high. We are seeing more and more situation where there are double-digit offers on a single home.
This means inventory remaining on the market, and continued competition for value-priced properties. We MUST continue to carefully work TOGETHER to understand the market AND to understand how we can compete with the market demand and other buyers right now.
We have been watching a statistic very carefully here in Phoenix to determine if the increase in average sales prices was just a blip or a trend. From all indications, we can now see a trend, and that we hit the bottom of the market in August. Since then, we have seen a 20.8% increase in the average sales price. March saw an 8.97% increase over the month of February. This is the highest price we have seen in Phoenix since June of 2010! The average sales price increased from $172,603 to $188,088.
New Phoenix home sale listings were up 7%, which is generally normal for March. However, it was still the 4th lowest month in the past 36 for new listings to come on the market.
If you have any questions about real estate investing in Phoenix or Arizona, please send me a quick message.
The average person, if they even have a retirement account, have a 401k which is investing in mutual funds. Don’t be average. Take responsibility and have some control 🙂 – Josh
Get a Financial Education and Stop Thinking Like an Employee
Years ago I had a conversation with a young man about 401(k)s. “I have a question for you,” he said. “I’ve read that you say 401(k)s are the worst investments, but I don’t understand why you say that.”
“What is it that you don’t understand?” I asked.
“Well,” said the young man. “Most employers match your contribution. For instance, my employer matches up to four percent of my salary. Isn’t that a hundred percent return? Why is that a bad investment?”
“It’s a bad investment,” I said, “because it’s your money to begin with.”
He looked puzzled and perplexed.
“Listen,” I said, “if it weren’t for 401(k)s, your employer would have to pay you that money as part of your salary. As it is, they still pay it, but only if you give up four percent of your existing salary in to a retirement account where you have no control. And if you don’t, well the employer comes out ahead. It’s your money, but they’re in control.”
Thinking like an employee
The young man still didn’t look convinced, but I could tell he was thinking hard about it. The reason this young man and many others don’t understand my reasoning is that they only think like employees. As an employer, I know that if it weren’t for 401(k)s, I’d have to pay that money to employees in their salary in order to be competitive.
For me, as an employer, a 401(k) is an advantage because I don’t have to pay the money unless an employee opts in, and if they leave my company too early, I don’t have to pay because they aren’t vested.
A recent study confirms what I’m saying and should help those of you who still find this logic confusing or not convincing.
A 401(k) steals your money
A recent study confirms what I’m saying and should help those of you who still find this logic confusing or not convincing. According to Steven Gandel, a study issued by the Center for Retirement Research indicates that, “All else being equal…workers at companies that contributed to their employees’ 401(k) accounts tended to have lower salaries than those at companies that gave no retirement contribution…In fact, for many employees, the salary dip was roughly equal to the size of their employer’s potential contribution.”
Translation, companies that don’t offer 401(k)s must pay a higher salary to compete with companies that do. Those company’s employees simply get their money as part of their salary rather than having to match it and save it in a tax-deferred retirement plan where they have no control and have high fees.
No financial intelligence? Stick with the 401(k)
Control is an important aspect of investing. As I mentioned, with a 401(k), you have no control over your investments as you generally invest in funds and indexes controlled by brokers, who are controlled by bankers, who invest in companies that are controlled by boards — all of which you have no control over.
If you want to be rich, you must have a financial education and control over your money and your investments. This is why I like to invest in my own business, purchase real estate and create products. I have a lot of control over those investments. Generally a good matrix is the more control you have, the higher your potential return. The less control you have, the lower your potential return.
Of course, it takes high financial intelligence to invest in things where you have control because you have to make a lot of important decisions. This is why being forced into a 401(k) probably isn’t a bad thing for most people. This is because most people have little-to-no financial education and wouldn’t know what to do with the extra money other than save it or spend it.
But I expect the average Rich Dad reader to be head and shoulders above the average person in terms of financial intelligence. The reality is that if you’re investing in a 401(k), you’re not making a return on your employer’s match. You’re simply getting what is owed you by your employer.
For some, this might be the first time you’ve ever thought of this. For others, I’m probably preaching to the choir.
Some questions for the Rich Dad community
If you’ve avoided the 401(k) trap, what ways are you using that money to build your wealth outside of a 401(k)?
Written by: Joshua Gayman
Last week the World seemed to take a break from worrying about Europe and focused their attention back to the United States and the meeting of the Federal Reserve AKA the Fed. The proof? The Euro rised big against the Dollar.
Ironically, the United States’ problems far surpass the debt problems of the European Union. The difference? We have a Central Bank that can print our currency out of nothing!
The Fed introduced an “Inflation Target,” which they set at 2%. This is something that has never been done before! Last year’s inflation numbers were closer to 3.5-4%, but given that the outlook for coming months is to drop significantly, expectations point to a drop under 2%, at which time would be a perfect scenario for the Fed to come out and unveil a 3rd round of quantitative easing AKA QE3.
The Fed also said they will keep short term rates(“over-night rates”) at all time lows through 2014. The Federal Reserve has never stated a policy that would last 3 years! What’s more crazy, is that debt is the only product the Central Bank sells. Can you imagine if a large company came out and said, “We are going to sell our one and only product at all time lows for the next 3 years.”? I am thinking we’d question whether they could survive another 3 years. The same should be true for the Fed, but I doubt it will. People are still so blinded by the illusion that they actually produce something..
The monetary policy by the Fed to keep rates low KILLS savers. This included anyone who has money in checking, savings, any type of deposit account, IRA, 401k, mutual funds, pensions, etc. If you have your money in one of these places, don’t expect a return for…YEARS.
So where do you see the economy going in the next few years? Well, if the statement by the Fed is any indication, I would say a strong recovery is not on the horizon.
I really don’t see these long term low rates benefiting the masses. I do see it benefiting small business owners who rely on short term loans. I also see it benefiting those who have Adjustable Rate Mortgages AKA “ARMS.” And the group I see being benefiting most by this are those savvy entrepreneurs who will use this cheap money to buy cash flow producing assets.
So what’s the bottom line?
The bottom line is that nothing is free. Money is no exception. There is a “cost for capital.” This means that there is a cost for borrowing money. DUH! The problem is that the cost of capital would be much higher if it weren’t for the Federal Reserve who can set the interest rate anywhere they want. By the Fed placing interest rates under the cost for capital, mal investment is brought into our economy by people who are getting loans for things they shouldn’t. It is because of this that I think the Fed needs to back off and let the market find it’s true equilibrium. This would allow for the smart money to come back into the marketplace. The smart money will stand on the sidelines as long as the Fed holds interest rates low. Investors can’t compete with the Fed when the Fed gets it’s capital by printing it out of thin air! Because the Fed simply “prints” their “capital,” they can hold interest rates at all time lows as long as they need to. Of course this is terrible for the economy as it means we are at their mercy.
If stimulating more debt would help us recover, I think it’s safe to say we’d have recovered by now. The reality is that pushing more debt into the system will not make our problems go away. It won’t slow the foreclosures, it won’t add jobs, and it won’t make life cost less money.
Like any private company, the Federal Reserve exists for one main purpose….PROFIT. The Federal Reserve can’t profit if it doesn’t exits. And it wouldn’t exist if people realized they don’t create anything of real value.
An indebted society is not a healthy one. Look at Greece.. If it weren’t for the US being able to print money, we’d be no better off than them.
Taxes are most people’s biggest expense. Therefore reducing that amount means more money immediately available to invest. “The tax law is a series of stimulus packages for real estate investors and business owners.“-
I look at taxes very differently. I look at taxes as a way to increase cash flow. The tax law provides tons of opportunity to reduce your taxes. When you reduce your taxes, you increase your cash flow (often immediately) which can be used to increase your wealth.
Reducing your taxes goes hand-in-hand with your wealth strategy. For most people, taxes are their single biggest expense. This means that reducing their taxes results in instantly increasing the amount they have available to invest.
The government wants to provide jobs and housing. To encourage others to do this for them, the government provides tremendous tax benefits to those who provide jobs (business owners) and those who provide housing (real estate investors).
This is a powerful formula and one that can be used over and over and over again because many of the tax benefits for entrepreneurs and real estate investors produce annual tax savings.
Then, as your wealth grows, so do the opportunities for tax savings, which means not only does the cycle continue every year, it grows every year as well so your tax savings are more, your increase in cash flow is more and your wealth increases even more.
Do you see why I am so passionate about taxes? Taxes are a tremendous tool to build your wealth.
When I was a young boy, the path to retirement was simpler. For the most part, if you saved your money regularly, paid your mortgage off, and lived modestly, you could retire well. This was partly because inflation was low since the dollar was pegged to gold and also because most employees could expect a company pension and health benefits until the day they died. It did not take much intelligence to have a secure, financial future.
Today, we live in a world that requires an extremely high, financial intelligence to retire well.
It is no longer enough to save money, as higher inflation and taxes wipe out your earnings. You can’t rely on a company pension because most companies don’t offer one. Instead, it is expected that you contribute to a 401(k) plan that may or may not provide you a secure retirement and that is simply a glorified, tax-deferred savings account that benefits the rich, not you.
These changes are because of two actions by the U.S. government that I’ve written extensively about, most notably in my book Conspiracy of the Rich. In 1971, Nixon took the dollar off the gold standard, making the dollar a currency instead of money. And in 1974, the Employee Retirement Income Security Act was passed, paving the way for 401(k) plans, forcing uneducated workers into the stock market, and creating the financial services industry.
It’s taken about three decades, but we’re seeing the devastating effects of those actions today as individuals and countries are living on the edge of financial disaster.
On an individual level, take for instance a young friend of mine’s father whose dad worked his whole life in an old-world industrial plant. Every time my friend talked with his dad, his dad would mention how long it was until his retirement, where he’d collect a pension and health benefits and enjoy golf a few times a week and sports on TV. There were no savings to speak of, some stock options decimated by the economic downturn, much debt, and no other plan. Unfortunately, only a few months before my friend’s dad hit the minimum retirement age, the plant went for sale, found no buyers, and closed. Now he, along with hundreds of others at that plant, cannot find a new job, have no savings, and are looking at a very insecure, financial future. For him, it may be too late.
On a national level, look at the Euro Zone. According to The Wall Street Journal, “The global economy faces a depression-era collapse in demand if Europe doesn’t quickly act to dramatically boost the size of its debt-crisis firewall, implement pro-growth policies and further integrate the euro zone, the head of the International Monetary Fund warned Monday.”
As IMF Managing Director Christine Lagarde remarked over the weekend, the Euro Zone’s efforts to stymie debt problems “is about avoiding a 1930s moment, in which inaction, insularity, and rigid ideology combine to cause a collapse in global demand… A moment, ultimately, leading to a downward spiral that could engulf the entire world.” If Europe collapses, the world goes down with it — and the jury is still out on what will happen. But the world’s financial experts are sending out the warning cry.
As you read these stories above, they probably sound vaguely familiar, have little emotional impact on you, and you may have even skipped over them.
These stories echo stories that have been shared for many years now. The news is filled with stories of people living in countries on the edge of financial collapse, and then buffered by good news here and there to keep us all from falling into complete despair.
The reality is that we have become used to living on the edge, and we’re forgetting what it means to live comfortably inland. This is not all bad, if you have the right mindset.
Living on the Edge Requires a Financial Education
Living on the edge requires alertness and intelligence, you cannot give up or be lulled or else you will fall. Each step must be calculated and taken carefully, but confidently, to get to safety. The only other option is to do nothing and hope someone will save you —which is akin to suicide.
It’s for times like these that the Rich Dad Company was formed. This website, our books and DVDs, our coaching, and financial education all exist to help equip you for the perils of our modern economy so that you can be sure to have the knowledge and practical application required to survive and thrive while others fail and fall.
For many, there is no choice about living on the edge. The die has been cast for us by people much more powerful and influential than us. But we can control our actions on the edge. It’s my hope you’ll step forward confidently and smartly, equipped with as much financial knowledge and courage as you can gain and muster. It sure beats the alternative.
To increase your financial education now, click here to find out about our free resources and online community.