135: Is Real Estate as Good as Gold?

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I have written and talked before about the value of gold. What is the real purpose of holding gold anyway?

Gold bugs will argue that gold is the only real money and that’s why they hoard it. I think that’s fair. Gold is money and if you just want to keep some money around gold is not a bad way to do that.

Not only is gold money, but it is essentially the anti-dollar. In other words, as the dollar continues to degenerate and dilute, gold remains constant. In other words, gold does not go up in value. It’s the dollar and other fiats currencies that go down in value relative to gold.

But is gold the only “anti-dollar”? I would make the controversial argument that real estate might actually be even more of a hedge against the dollar.

After all, owning real estate is a hedge against inflation because rents go up to counter-act the effects of diluted fiat currency. That, in turn, increases net operating income and thus…the value of the dollar value of the real estate. So it’s doing pretty much the same as gold except it is throwing off cash flow along the way.

Now here is the kicker, inflation erodes debt. So, if you financed that real estate not only are you benefiting from the hedge against inflation but the dollars you borrowed have effectively become worth less over time. In other words, if you borrowed $100K 20 years ago that is worth a lot less in terms of buying power than it is today. That loan you took way back doesn’t seem like much money anymore in today’s dollars.

If you didn’t get this part, read it again. It is critical. Inflation erodes debt. So, with real estate you are getting not only the inflationary hedge of the real asset and the cash flow, but you are effectively printing your own money by letting inflation erode your debt.

Simply put…this is why people get rich with real estate.

Now, you know that I am a multifamily guy. I invest and sponsor syndications. For a variety of reasons, if you are an accredited investor with a full-time job, this might be the easiest way to invest in real estate.

But…that’s my bias. There are others out there like my friend Dean Graziosi who was in my course, Your Roadmap to Real Wealth, that own thousands of houses.

The important thing is that you should listen to as many opinions as you can—preferably from people who know more than you—and make your own educated investing decisions.

In the single family home space, there are few people who know more than Marco Santarelli and he is my guest on this week’s Wealth Formula Podcast.

Make sure to tune in to this episode as he makes his case for single-family turn-key rentals homes.

Marco Santarelli is the host of the Passive Real Estate Investing show — the show where busy people like you learn how to build substantial passive income while creating wealth for the long-term.

Marco Santarelli is also the creator of DealGrader™ – a scoring system that measures the investment quality of a real estate investment, giving you an overall snapshot of its profitability and investment risk.

He purchased his first real estate investment at the age of 18. He successfully handled the entire rehab and property management of his first property without ever taking a course or reading a book on the subject.

Marco went on to get his real estate license and sell residential real estate for three years before leaving real estate sales to pursue other active business ventures.

Because of his love and passion for real estate, and desire to help others succeed in building their wealth through real estate investing, he eventually returned to real estate investing and founded Norada Real Estate Investments in 2003.

Today, Marco Santarelli is a licensed California real estate broker and runs a successful real estate investment firm focused on helping other investors build wealth through the power of real estate.

Shownotes:

Marco Santarelli’s background
Tightening before 2008
Seeing real estate as gold
Is it a good time to be buying single family real estate?
What should you look for in a turnkey provider?
Noradarealestate.com