Not Your Average Investor Show
Not Your Average Investor Show
405 | The Greatest Wealth Transfer In History Is Going Down- What It Means For Real Estate Investors
The greatest wealth transfer in history is upon us, with trillions of dollars set to pass from Baby Boomers to Millennials. This seismic shift in wealth distribution is not just a possibility—it's an unfolding reality with profound implications for the economy and the housing market.
But it comes at a particularly confusing time in the housing market: high rates, shortened supply, and landmark lawsuit that could change the way homes are bought and sold forever.
That’s why understanding how rental properties can play a pivotal role in navigating these changes is essential for those looking to mitigate risks and build a stable retirement.
Join us for this week’s episode of the Not Your Average Investor Show where Gregg Cohen, co-founder of JWB, and show host, Pablo Gonzalez, will break down the impact of this wealth transfer and delve into why rental property investments are a smart move right now.
We will cover key insights, including:
* What experts are predicting from this wealth transfer
* How inherited wealth could influence the economy (especially the real estate market)
* Long-term benefits of owning rental properties during and after the wealth transfer
This will be the next great topic of discussion on news networks and cocktail parties alike. Join us to be part of the conversation, and get an understanding before everyone else
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Today, we're talking about a giant topic, a giant cosmic shifts in economics, in generational wealth, what is being titled as the greatest wealth transfer in history. And that is the massive amount of assets that are set to pass from the baby boomer generation. To the Gen Xers to the millennials that they have, brought into this world. And the ramifications of that for everybody involved for the inheritor, for the person leaving behind a legacy. And for us as real estate investors Welcome everybody to your weekly edition of the not your average investor show. I am your host Pablo Gonzalez up in the mountains of North Carolina. This summer and with me as always in the JWB studio is the man that I affectionately like to call GC because of his genius concepts because he knows how to generate cash flow because he's a great co host and because his name is Greg Bowen. Say hello, Greg.
Gregg Cohen:Hello, everybody. Fantastic to be with you today.
Pablo Gonzalez:It is great to be with you GC virtually, you know, I do a show from here at least a couple of times a year. Really nice weather up here. Not going to lie, man. How's is it warm down there in Jacksonville right now?
Gregg Cohen:It is warm. It is humid, but you know, I was up in Atlanta this past week. And I know how awesome it is up there at your camp and up there in North Carolina. And we were just hanging out, going down creeks and, you know, just, you just like on the side of the road and you find this like all day awesome activity. So I was, I was experiencing a little bit of it. I know you're having a great time up there with family, man. And hope you had a great fourth man. Hope, hope everybody had a great fourth.
Pablo Gonzalez:Yeah. Agreed, buddy. Agreed. And I want to right now welcome our community with a little ritual that we have, whether we are in person or remote, how do we kick it off? You see
Gregg Cohen:the roll call, baby,
Pablo Gonzalez:we're going to lead off hitter leading us off today as is tradition. His name, John Henning. We've got the MVP in the house saying hello to everybody. You know who that is, right? You see. Mr. Leigh Bishop, Mr. Leigh Bishop. We got Joanna, our community manager in the house, checking in with everybody. If you need anything, checking with Joanna directly in the chat. We got Laura Colby from Washington state checking in. We got Pamela Myers, our favorite smile on the North on the Pacific Northwest, also in the Seattle area. Maybe y'all should connect. I'm just saying we got our regulars in the house. Do you see who our regulars
Gregg Cohen:are? Of course, Gary and Roslyn Riley from Murrieta, California. We regard you.
Pablo Gonzalez:We got the my owner! Saying good mornings from the Ssssss imbalance Mountainssssss of Colorado Ssssss. He adds a lot of extra S's, GC, that was not a, a speech impediment that I developed in the mountains. Penny Green! Good to have you in the house my friend. We got Christopher Lee from Fernandina Beach saying hello. We got our favorite name to pronounce, Aaron O'Neal! Into the light, we got, we got a El Gran Amigo, G. C. Desde Duva.
Gregg Cohen:Buenas
Pablo Gonzalez:tardes amigos, Bill Shields. Welcome. We got the legend of Charlottesville, Virginia. The man who has a hockey arena named after himself. One of the greatest referral sources to JWB. G. C. You know his name.
Gregg Cohen:Of course. Roger voice in
Pablo Gonzalez:that.
Gregg Cohen:Good to see you, buddy.
Pablo Gonzalez:How could you not know his name? We've got the Maven from the mountains of Denver, Leslie Wilson. We've got the shaman in the house with his good morning. Good afternoon. Hope everybody's doing well from the West coast. We got Mark Norman back from sunny. So Cal good to see you, Mark. Well, so we got, Oh, Reggie, I'll fall. From the Inland Empire, Reggie, check it in. I
Gregg Cohen:hope we, I hope we meet Reggie in person here soon, because you know, with these nicknames and the way that we announce them, you just, you start to get a perception of who this person is. Reggie, you got to come down in real life and hang out, man.
Pablo Gonzalez:If Reggie doesn't show up with an ascot or maybe like a beret, I'm going to be very disappointed. Just say it. He's, he's at least got to be cheering for France against Spain in a couple of hours here, which I will be cheering against. We got Eddie Harris from hot Lana. Yeah. A little part of the world that you just. Became familiar with GC. We got the first family of the Not Your Average Best Show, the Patriarch and the Matriarch. Who are they, GC? Ken and
Gregg Cohen:Carolyn Maleen. We salute you.
Pablo Gonzalez:Who else? We got Connie Stamos in Altadena, California. We got Eddie. Oh, we already said Eddie Harris. We got Donna chicas back, Donna. Good to see you in here from Bakersfield. We got Madge Garcia, friend of all friend of the show, Madge Garcia. Good to have you back, Madge. I haven't seen you in a minute. Zenobia Lewis from Georgia. Good to have you Zenobia. this, uh, feels like an interesting topic today. GC must be something people are talking about to get such great attention. Oh, cool. Danette Colvin from Baltimore. Welcome back to that. Haven't said your name in a minute. I feel like Misty Johnson, legendary Misty Johnson, the ninth best attendee from her and Troy from last year. Good to have you from Colorado as well. Uh, but before we talk about this all important topic, but we got breaking news, GC, you haven't breaking news in a while. What's the news?
Gregg Cohen:We got some breaking news and something I'm really excited to share with all of you. Every once in a while there is an opportunity to share a great incentive with all of our clients and a reason to, perk your ears up and, and take some action and add some properties to your portfolio. And that's what we're announcing right now on the show today. JWB is doing our largest incentive package that we have ever done. And it goes through the end of this month for all clients that put properties under contract through the end of this month. But what JWB is doing is buying your rate down three quarters of a point. And this is, this is huge. What this does is get your rates down to probably what they're going to be, what we hope they will be eventually when rates do come down, when the Fed makes those decisions and, and interest rates come down. So we're kind of We're jumpstarting it for all of our investor clients. And again, it's for all those who put new properties under contract through July 31st. And so, put the numbers to it and to share with everybody the impact this has on those properties that you'll be able to acquire. What it will do is it will raise your rate of return about 1%. So it'll take those rates of return for JWB turnkey properties up to about nine and a half to 10 and a half percent returns. And those are of course, true IRRs. And it has a significant impact on additional positive cashflow as well. Average positive cashflow increases just by doing this incentive are about 725 of additional positive cashflow in year one. And of course, over 10 years of owning this, that's over 7, 000 of additional positive cash flow by taking advantage of the rate buy down. In addition, what we are doing is continuing to honor those incentives that we had done previously for the last little while here. We've had our maintenance credit incentive that we have offered on all of our properties and we're keeping that. So what happens there is JWB covers. the first 4, 000 to 6, 000 of your expected maintenance costs for your property. And you know, it comes out to a 4, 000 incentive that's dependent on the purchase price of your home. So you can get to stack all those incentives together and wind up with a really great opportunity to purchase. And you know how we've talked, Pablo, you know how we've talked about how important it is to be able to buy before interest rates come down. Yes. Because. When interest rates do come down, what will happen is there will be more buying demand and home prices are expected to increase substantially. So I'm really excited to share this with all of our Not Your Average Investor community because now you get the advantage. of buying before overall interest rates come down. And again, JWB is buying that rate down for you. So really kind of takes that, makes it even easier to take advantage of that future home price appreciation bump that we expect when interest rates do come down.
Pablo Gonzalez:I like it. You see, I like everything about this thing. The fact that you are adding an extra point of IRR to, to the returns. We've talked a lot about how over the life cycle of owning a property, 1 percent leads to hundreds of thousands of dollars in returns, especially for those of, you know, You know, those of our community that are buying and what we affectionately like to call bundles, right? You're picking up three, five houses at a time. And I know that that's happening right now. And the amount of return that direct drives back by itself. I find super, super attractive. The idea that it's like a stack on stack, right? So like increase, like. Right. Right. Buy down. We talk about this idea of like holding the rate for 30 years and how that's like a cost you can control forever. That is super locked in. Plus receiving four to six K in like a maintenance credit. That's a really nice rainy day. Hey, next turn. Next thing that happens doesn't have to come out of pocket. and more than anything, this idea of giving people a nice carrot to Move now, right? We talk about knowing the answers to the test of historical behavior of real estate, how when interest rates go down, prices go up, and how buying before the interest rate goes down is buying the dip in demand so that you can lock in that equity you know, immediately once that starts to happen. And not be, not be rushing in when everybody else is getting greedy. I think it's awesome, man. Question is this, is this available from every lender at JWB? Is there anything that has to do, Pamela Myers is asking about like having a, having a deal in the works with one of the lenders. Is that something that anybody needs to worry about?
Gregg Cohen:Yes, there are restrictions on lenders. So the back end of this, this has actually been something that's been in the works for us for well over a year. We're actually able to partner up with the opportunity to, to do what's called buying forward commitments. And what that means is we actually put our neck out on the line and, and, and buy a certain amount of. Loans down and we do this with a capital partner. So it's, it's with a very, it's with one lender that we work with. And so it is, it, we do need, you know, clients of course to work with that one lender. There's a couple of other things that you'll want to talk through with our sales team. Certain questions about the loan process and whatnot, but nothing substantially different. You will need to work with one lender. We'll talk you through how that will go. And it's available to all clients who put properties under contract going forward. So this is not available to those who have loans that are closing in the past, or if you're already working with a different lender, I'm sorry, it's not available for loans that are currently in process or in the past. But it is available to all current clients, all new clients. And that's part of the reason we extended it all the way through the end of this month is it will be relatively easy for current clients to make the decision to put additional properties under contract. That doesn't take more than, you know, a phone call or two if you're a current client. But for new clients, many times it takes a series of phone calls and it might take two or three weeks to bring you on in an appropriate manner. So if you're somebody who has been thinking about making your first JWB purchase, This is the best time. This is a great time as far as the incentives go to doing that. You'll want to reach out to us immediately. You want to get that process started. Really, there's only call it three weeks left of when you'll be able to put properties under contract. And that's already an aggressive timeline to bring you on the right way. So would encourage you to reach out to our team. You can do that by sending us an email at info at jwbcompanies. com. You can reach out to Johanna here, who is our community manager, and she'll be able to facilitate that for you. If it's a phone call 904 677 6777 or you can set up your own chat with us. You can go to chatwithjwb. com, set up a phone appointment and be on your way. And if you're a current client, it's real simple. Just reach out to your portfolio manager and we'll get that process started for you.
Pablo Gonzalez:Beautiful, man. GC, is this something that you're publicly saying which lender it is specifically, or is that something that you just have a conversation with on the phone?
Gregg Cohen:Um, not opposed to saying the name of the lender, but I, it honestly escapes me right now. Okay. So I'm sure we'll get asked about it on next show and I'll, I'll make sure I remember the lender's name.
Pablo Gonzalez:Okay. Sounds good, man. All right. So that's, that's an exciting thing. Well, let's encourage folks to go to chat with JWB. com, shoot an email at info JWB's company, you know, Pamela, I would say, reach out to your portfolio manager and who you're working with. She'll they'll get you all those infos and GC will show up here next week with the actual name of the lender. Take care. Buddy. So prepared always,
Gregg Cohen:you know, one bit of information. There's always something
Pablo Gonzalez:awesome, man. Awesome. All right. You see, let's talk about the subject at hand. We got 70 plus people here today. It's a, it's a big attendance for a, for a summer, for a summer afternoon, man. So what is happening? This headline of the greatest wealth transfer in history is referring to the fact that over the next 20 years, They're predicting approximately 84 trillion in wealth will be passed from baby boomers to their Gen X and millennial children, estimating 72 trillion going directly to heirs and 12 trillion going to charities. And what they are predicting as the economic impact is that millennials in particular, right? A generation that you and I are both a part of That have often much maligned this kind of their lot in life, right? We graduated, got hit with the economic recession. Then the pandemic hit us right as we're like having kids and all these different things. They're predicting that millennials will become five times richer by 2030 GC. What do you think about when you hear this stuff?
Gregg Cohen:I think that's a lot of avocado toast that's going to get purchased here.
Pablo Gonzalez:That's a lot of caribou coffee, baby.
Gregg Cohen:You know, I think this is, first of all, this is such a cool topic to talk about. I want to give credit to Frank on our sales team who, who brought up this topic, sent it our way because it's something that When he said it our way and we started doing the research on it, we were like, wow, number one, this is really important to talk about because there's a lot that you can do no matter which part of the generations you fall under. There's a lot that you can use here to your advantage, to set yourself up and your future generations up. But I didn't realize this. It's kind of one of those things where I should have, I feel like I should have known this. You know, but I didn't really think about it, but I do think it's going to have a dramatic impact when you think about not just the dollars that are going to largely millennials making them the richest, generation in history, but also the, the thought process because of our shared experiences, we'll just say because of millennials shared experiences here. And what they have seen not working and their inclination to try alternative ways of getting to those, you know, big goals, whether that's a comfortable retirement or, or what it may be. So it's, it's the amount of dollars. It's who it's going to in their, their kind of experiences and their inclinations to maybe do something different. I think this is a really cool topic for us to discuss as we all lean towards real estate in this, in this community here.
Pablo Gonzalez:I was just telling you, as I, as you know, when I go on a long road trip, I listened to a couple of podcasts and I make a bajillion phone call. And as I was driving up to North Carolina on Saturday, I called a buddy of mine. I knew that is, I knew that his father had just passed and he is right around my age, you know, which is significantly older than you GC and much more mature. We're having the conversation of he is now inheriting a 350, 000 home in Tulsa, Oklahoma, along with about a 400, 000 worth of a, you know, investment portfolio that his dad is leaving behind. And this is affecting his life in a very particular way. He has been in L. A. for a while. He's a super talented writer, musician guy, but also a marketer working in marketing, trying to start his own company, doing podcast production. He's taking this opportunity to move back to Tulsa, move into this home that he felt he was never going to be able to, you know, own a home. Now he's inheriting this home, taking these 400, 000 bucks. And he's going to take a little bit of that and improve the home a bit. Then he's also thinking about buying some commercial real estate to, to open up like an art studio and maybe a podcast studio, and then do a couple of other things with this money. And as he's doing all of this, he's going through the process of financial education for himself. The probate process and like working through like the legal setups and whatever his dad had or didn't have. And his takeaway is, man, I feel like I'm the tip of the spear and all this stuff. And I should do, you know, cause he's a super talented artist. He's like, I should do a one man show about what I'm going through. I'm like, yeah, bro. So you know, that's where obviously the conversation led to content for me. But yeah. You know, it just felt very emblematic of a very, very likely story that we are going to continue to hear. And to me, it sets up really nicely to think about what are, what are the behaviors that we're expecting this generation of people that are inheriting things to do, how that's going to create ramifications across the economy and for real estate investors. And then what can The, this boomer generation be thinking about as far as legacy goes to what they can do now in order to leave behind the legacy that they really want and set their kids up, you know, have their kids remember them the way that they want to be remembered. Right? So, what do you think? You think we start with, with what we, what we think the behaviors are going to are going to. Are going to create GC. Well, I just,
Gregg Cohen:I just had
Pablo Gonzalez:a
Gregg Cohen:thought and a question there. It sounds like I couldn't tell how that story was going to end. I didn't know it was
Pablo Gonzalez:one man show. Is that what you're saying?
Gregg Cohen:One, one man show. Yeah, clearly it ended in content, obviously. But, you know, I didn't know if your friend was going to feel the burden of a house that you know, probably is not cash flowing. Right? Probably it's not something you could put a renter in there and have it be creating money each month for him. I didn't know if, if, you know, because there's a lot of folks that go through that scenario right there and they don't have the opportunity to move into that house in Tulsa. And there might be different family members that, you know, squabble about things. And all of a sudden, this beautiful thing, this life that was lived and the fruits of that life monetarily, at least being passed on, create. as much pain and heartache as, you know, the intended benefit. And so, but it sounds like from your friend's perspective, that actually is working out quite well. He, am I understanding that right?
Pablo Gonzalez:Yeah, it is. It is. And you, you mentioned a couple of details there that are really significant to it. A, He's an only child and is able to, he's not gonna, he's not going to fight over this thing. Be, he happens to be in his early forties in a transitionary point in his life where he's just like, you know what, this is the sign I need to like reset my life and go do this. Right. And that I'm sure is going to be some of us probably won't be the majority. Right.
Gregg Cohen:Yeah. So you could, it's wonderful that it seems to work out well for him and his scenario, but he still is saying to himself, Oh man, I really need to learn about this so that I can handle it the right way. It doesn't always work out that way. You can imagine the, you know, the negative. you know, things that can happen. So either way it shakes out, this can go really well for those that are receiving the funds. It can go really poorly. And this type of discussion, education around if you're a boomer, And what can you do to set this up to be a great scenario and to set up your future generations for success? How can real estate help you do that? Do you need to be afraid of leaving real estate to your future generations? Is real estate actually advantageous compared to other things that you were thinking about leaving? Is there a reason to maybe give more real estate? to future generations. Those conversations need to be had. I know we'll have it here on the show today so that all of this hard work, it can be sent to your future generations in a way that not only brings them monetary gains, but the whole process can be, can be focused on the love you know, that was shared between, between family members. So I think this is a really critical topic and one that we really need to shed light on. But we do it from both angles. It's from the angle of the baby boomer, let's say, who is planning to preserve their legacy going forward. I think that's a conversation. Real estate usually gets shut out of that conversation. Many times people are like, nah, I'm just going to sell it all. I don't want to deal with it. I think we need to open up that conversation and just understand what you're giving up if you decide to go down that route. And then from the angle of call it the, let's just say the millennial who is inheriting this. What can you do to make sure that this is a smooth process and one that focuses on the love of the family, rather than some of the negatives that sometimes happen when you know, things become inherited between family members. And then what can you do to make sure that your Taking this beautiful gift that's been given to you and maximizing it.
Pablo Gonzalez:Yeah. I like that. I like that. You see real quick, Louis Voiles is saying in the Q and a, what was that phone number again? What's the phone number to JWB? So Louis can set up a call.
Gregg Cohen:It's real easy to remember nine zero four six, seven, seven, six, seven, seven, seven.
Pablo Gonzalez:Nine zero four. I'm putting it in the Q and a answer. Six, seven, seven, six, seven, seven, seven. Really easy to remember. Love that. All right, Lewis, hop on the phone, buddy. All right. So, so let's talk about that. You see, but first let's, let's just talk about from the perspective of what is, what is the overall impact here, right? Like I hear, I hear this massive wealth transfer. I think of myself. And the people that we know and the conversations that are being had at all in our generation, and I sense that there is, there is the minority, the not your average investor, right? Who like you and I have gotten educated in real estate, started building a nest egg in that stuff, bought our primary residence. I think there is a large majority that. Or at least there's a substantial amount of people that have at least bought their primary residence was as millennials. So they got in, right? And then there's a big, big group of people that haven't, right? Like there's a big, big group of people as, as the younger millennials that I I'm on this, like Reddit, I'm on like the real estate. reddits, right? There's a couple of them. I hear a lot of pain in the system of folks that have been yearning for real estate, feeling like they've gotten locked out of the system based on the happenstances of their career hiccups and mapping to these just massive black swans that have happened at crucial moments in our lives. And I think of, The idea of somebody like my friend who maybe didn't have a lot of investing and then now is inheriting, you know, one, one real estate asset and 400, 000 and I, and I'm trying to map to like, what are the behaviors of millennials and Gen Xers as they do this? Right? I, I lumped Gen Xers into the folks that had the best opportunity to To buy real estate in the run up of 2001 early on and be able to hold up to that. Right. So that's just my, my kind of default, but millennials I think are, I think there's a thirst for buying primary residences that they like. I think there is a thirst for not feeling paycheck to paycheck and broke. Even, even, even high income earners still feel paycheck to paycheck. And there's like highly inflational. career trajectory that we've had. And then there's also a thirst for experiences and stuff like that are, are, are the three things that I could see if a whole bunch of money gets dumped into this generation that feels, that feels, you know, under funded could happen. What do you think about that?
Gregg Cohen:Yeah. And I think you add onto that. There is, again, those shared experiences that are leading people to be much more open to doing things that their parents didn't do or to the level that their parents didn't do. And you put all that together and you know, you, it's easy to see that the decisions that the kids make are inherently, kids always make, want to make different decisions than their parents. So that's not, that's a, that's going to happen all the time. Right. But you know, all those things that you just described there, it's easy to see that You know, if we go down to the investment decisions that are being made, it's pretty easy to see that the decisions that the millennial generation makes as far as setting up their own retirement accounts and how they invest, it's going to be different than how previous generations have made, have been made. And they probably should be too, because the case study for it working or not working is right in front of them, right? We, in our, in our Not Your Average Investor Summit, which was our, our event that we had in February, the keynote address that Pablo and I did was talking about how retirement is broken. And there's a lot of data to support that what was working for previous generations is not working for. Us right now and a different mindset and a different perspective and a different asset needs to have a seat at the table, which obviously we believe is a rental property investing in real estate. But the data doesn't lie, right? I was looking at some of the data here. The median household retirement savings currently median household retirement savings for our country is 185, 000 and that's not a lot to get you through retirement. And that's why only 50 percent of current income is, is projected to be replaced at retirement currently. So people are going to have to live half of the life with half of the expenses. in order to retire. And then you go down and down the line, 45 percent of Americans say it's unlikely that they'll retire comfortably. And the closer that we are to retirement, the worse off we are and the worse off we feel. We feel like it is not attainable. And if you go back to prior generations, it was attainable. It was, it was expected if you just worked hard that you would wind up with a comfortable retirement. So you, you put all that together with kind of the, the, the inclinations that millennials have, the things that they already do differently as far as investing in experiences and their proclivity to taking on social, certain social issues that The prior generations just don't care as much about, you really start to form this narrative that things are going to be different going forward. And in the investing space. I think it's a beautiful thing because flat out right now, the way that we invest and prepare for retirement is not working. And the problem is only getting worse when we think about how much longer we're living and how much more costly it is going to be to live longer. It's really a ticking time bomb we have to fix. And so I'm glad that millennials are you know, they're, they have that proclivity To make a change like that, because I think in that regard, it will be for the better.
Pablo Gonzalez:Yeah. Agreed. And, you know, to, to your point, it's almost, I remember in that data, it was like the median, like the median savings was like 175. And if you look at the average savings, cause it's now not adjusted for like this highly, highly top end society that we live in was somewhere around like 300. Man, it almost puts, it almost puts my buddy like right there, right at the, right at the average, right? So like, I would assume that that medium of like one 85 probably trends younger in the boomer ages, right? Like it's probably, probably a little higher, more concentrated at the top. And what we're talking about is that redistributing down and, and like probably flattening, making that median and average a little bit more similar. And as we're talking about it, I see myself in that story, right? I see myself in the, Hey, five years ago. I had about 170, 000 worth of, worth of retirement and net worth. And I've been able to buy five properties since then. And, you know, I now see a very different financial future moving forward, but to your point, and in this article that you found that I think is a really great breakdown of it by Merrill Lynch that I shared of what the impact will be, I shared in the chat, I'll share it one more time. There is this idea that millennials, younger investors are. Less confident in traditional investments and much more open to alternative asset classes, right? It has it has this idea of alternative asset classes from age 43 and up as only 32 percent and then 21 to 42 as 75%. I think that, I think that highlights really nicely this idea that the younger generations just don't see the same path forward. They're not validated by, by what they see around them of this thing is working. They're hearing more about real estate through Tik TOK. They're hearing more about like Bitcoin millionaires through Tik TOK and things of that sort. So it's really opened up their mind to what they're going to. Put their money into once they get this stuff, whether I assume that. Thanks to the proliferation of the internet. It's a lot easier to get financially educated and not blow this stuff, right? So they're probably going to be thinking something along the lines of like, all right, cool I got this shot now to like set myself up to catch up to this retirement thing Hopefully pay some debts off and then make some bets in the future and I could see a lot of that rolling towards Towards real estate which I would assume would make home price appreciation go up Maybe, maybe continue to make inflation rise higher would, would, would be what I would be thinking is, is going to be happening. Make rents go up, right? Because there is now, you know, like this, like, more competition, more cashflow in the system, right? Like, for things like that, is that what you're thinking?
Gregg Cohen:Yeah, I think all that's going to happen. And I also think, I think about the, what we know before this really great, you know, this really interesting information that we just shared, just like we have known that millennials have a proclivity to be doing something a little bit different, like the data that you just showed. Right. I think it said 75 percent of those. age 21 to 42 said that they did not believe traditional investing was going to help them reach their, their financial goals. So we, we've kind of known that, and we've also known that retirement is broken and not working and can't depend on social security and all that good stuff. What we also have known is that, um, Even prior generations have generally understood and have said that real estate is the best asset class for them long term. I shared a recent Gallup poll that talked about how it was nearly twice as many Americans believe real estate is the best long term investment, nearly twice as many over traditional stocks, bonds, mutual funds. So you've already had that belief, even from prior generations. It was just really hard to do that. So, you know, again, you're seeing all of these things that are kind of combining. And I think it does get to the point that you made there where I do think that real estate is going to have a bigger seat at the table for millennials as they start to plan out their retirement accounts. Obviously that's the main thesis behind our turnkey rental property investing product and service is that it's here to create ease and access and to have rental properties have a seat at the table. So I think this is a good time to be in that, in that industry because it's a needed, it's, it's a need. And it, you could just kind of see it all kind of coming together. And I, I'll point this out too, again, some stats that I pulled right before here, even though Americans think twice as many Americans think real estate is a better long term investment than traditional assets, stocks, bonds, gold or stocks and bonds, mutual funds, and gold. 61 percent of Americans own stock, but only 12 percent own rental properties. So the market has just been saying that And there needed to be an opportunity to help those people invest in the things that they already thought was the best asset for them. And so I think alternative assets like rental property investing for retirement purposes, along with a number of other alternatives, are going to continue to see more and more demand, especially from the richest generation in history, which will be millennials. And I think the results of that are all good things when it comes to owning rental properties, right? Rents going up, home prices going up, and a hedge against inflation as inflation goes up partly because of those things.
Pablo Gonzalez:Let's talk about it. I, I, I totally agree, man. Let's talk about it a little bit more granular, right? So, what's the number? It's 84 trillion dollars, right? 72 trillion dollars going directly to heirs. Let's To me has to cause some level of inflation. Like if, if the government all of a sudden decided to print 72 trillion and put it into our generation, you know, lo and behold, right, we would all be up in arms about it. Because it's a direct path to inflation. You know, this is obviously not a government printing money situation, but I have to assume that the effects are somewhat similar, right? Going some 72 trillion of my parents. You know, are using this thing to live to my parents no longer need this thing. And now it's in my bank account and in my, you know, in my app table, I guess you wouldn't want to call it my personal that's gotta have an inflationary effect on pricing. Doesn't it?
Gregg Cohen:Well, I think inflation is going to happen regardless. To me, it's hard to pinpoint that and saying how much you need more information to show how much of an effect that's going to have on inflation, because we don't know exactly where those dollars are today. You know, those dollars aren't being printed. They're in the economy right now. They might be invested in businesses right now, and then they might continue to be invested in businesses in the form of stocks in the future and whatnot. So I think you need a little bit more information before you can say, well, This is definitely going to lead to a sharp increase in inflation, but I think what we know is that inflation is very likely to continue. And And one of the big drivers of, so it's about where does that money go to? If a lot of that money would go into real estate, real estate prices and rent prices are a major driver of the metric that we use to read inflation, which is the consumer price index. Okay. So it's, we need a little bit more information to know what are, what are those 72 trillion dollars. now. What will they be invested in? But if we continue to go down that path and think a large portion of that would go from all it sitting under a mattress somewhere to, to invest it in real estate. And we know that real estate is a big driver of CPI. You could, you could definitely make an argument that you would see. substantially more CPI in the future. You just, you need a little bit more information for me. All I know is that inflation is going to be there in the future. And I want to put my money in things that is a hedge against inflation that protects me when inflation goes up. And as an owner of rental properties, you have that built in hedge against inflation. What that means is as the cost of goods and services go up around you, generally speaking, the cost of rent and home prices tends to go up as well. And so that's that built in hedge against inflation. And so bottom line, I want my money and stuff like that, because when inflation happens, I'm going to have that built in protection there.
Pablo Gonzalez:Okay. Yeah, that makes sense, man. Thank you for, thanks for lining it up for me that way. Alright, so let's talk about, let's talk about, I almost see. Like, there could be like a tale of two millennials here, right? Like there's going to be the millennials, right? There is, we have been talking about how wealth has been concentrating up at the top to start, right? And it's, and it's largely in this generation, but there's going to be haves and have nots of the folks that path past that have this, it's going to go down to their heirs. That wealth is going to stay in those families to a large extent. And then there's going to be millennials that are right. Like somebody who is. Has like middle class or lower middle class parents, socioeconomically, they're going to inherit less and the poor are going to inherit less. Right. So like, there's not going to really be like, I don't know if this is going to cause upward mobility unless except for maybe the part of the millennial generation that is very charity giving. And, and we talked about these trillions that are going to go in that regard. how do you see it affecting like workforce housing? Versus starter homes versus, you know, beachside properties, stuff like that. Can, is there like a segmentation in your head that happens with this transfer? I
Gregg Cohen:haven't really thought through that to be real candid there. What I hope is that we use this wealth to create more of the housing supply that is needed. And the housing supply is needed across all sectors of housing. But the one that is most needed is workforce housing, and that's really important for our entire country that we create great housing opportunities for those, those essential workers that are in our communities depend on and right now they face the greatest shortage of housing. And what that means is, you know, and overall rents continue to stay high. You know, you've seen rents going up way more than it's been healthy for our country for our country in the last few years. Even as a real estate investor, right, that's not a good thing long term. We want rents to go up sustainably and the shortage of workforce housing is the biggest reason why rents have gone up so much. Same thing with home prices, right? We want them to go up sustainably. Because there's a way that we can win as rental property investors and real estate investors and hit our return requirements without home prices needing to go up, you know, 15 percent a year or 20 percent a year. So I, I haven't thought where that money flows to and what sector of housing it flows to. I'd love to hear any thoughts from the, from the community, if you want to chime in and, and put some thoughts in there. But I certainly hope that it goes to workforce housing because we need it.
Pablo Gonzalez:Yeah. You, you would think that we're both market guys, right? Like you think that supply and demand plays out and what there is where there is this excessive demand supply will follow. And when there is money to be put into that that all of a sudden it gets freed up was, is probably going to go that way. I mean, if it, if it paints itself to be as good of an investment as we believe it is, right. With just the supply demand dynamics, it would make sense that money flows that way. Right.
Gregg Cohen:And I think for the first time that I could remember, I've been doing this almost 20 years. The first time I can remember a, a wave of understanding of the problem from the shortage of housing, specifically workforce housing, and just kind of a wave of momentum to solving that problem when it comes to incentives that are now available to developers to make sure that they are bringing in workforce housing, affordable housing. It really has gotten a lot of steam. As it's become one of the top problems in this country over the last couple of years, but I can't remember a time in the previous 18 years where there were there were this many dollars available for developers to be able to develop workforce housing. And just even more than that, I think everybody recognizes now it's a need. It's been a need for a long time. It just hasn't gotten the. the, you know, the credit that it has been due, but now hopefully we can take a major dent out of the problem and, and bring more supply because that, you know, this topsy turvy nature of way high housing prices and way high rent increases over time that creates other problems, even though we have largely benefited from this. and the real estate investor space, it creates big society problems. And, you know, and like I mentioned, there's more than enough ways for us to win without needing that. So, yeah, so I hope, I hope this time is, is really impactful in taking a dent out of the problem there.
Pablo Gonzalez:Yeah, man. And if I was to, I'm going to, I'm going to take Mike Foster's question here, and I'm going to interpret a little bit with the lens of what we're talking about. Mike's writing, I know this is totally speculative, but if there is this likely massive transfer of 84 trillion in wealth coming, what do you think of the likelihood that our salivating federal government will find it too irresistible to disallow that kind of intergenerational wealth transfer? And instead swoop in to extract a large portion of it to pay down our massive federal debt and fund expansive government priorities. I read that and you know, I think anybody can have an opinion on that. My opinion is the right way to do this. would be if the government were to like, understand that this is happening and then, and understand that there's a massive need for workforce housing and incentivize people investing in workforce housing, incentivize the gears to turn in the workforce housing sector. Not unlike the show that we did last week about insurance, when they realized that home prices were getting unaffordable in Florida. And insurance really wasn't helping. So they swooped in to create more competition in the insurance market, lower insurance rates, create better insurance products. These things that we're now seeing come to fruition. Right. So like, I, I see this, I see this idea of workforce housing being such a, such a need that the intelligent thing to do would be to think about this like giant wealth transfer and think, Hey, how can we, how can we grease the the You know, grease the lane so that, and maybe put some bumpers in there so that people can be rolling strikes with this money in a way that helps everybody.
Gregg Cohen:Yeah, I, and I think that can be there regardless of that, that should be there regardless of whatever this wealth transfer is that that's really where things are going towards right now at a greater pace and momentum that I've seen in the past. So we're already going down that path. You know, as far as what happens here, obviously this is a large transfer of wealth. You know, are there, are there things that would could be done from a politics perspective? Sure. You know, I don't spend too much time thinking about that. I try to make decisions on the here and now. And you know, one of the reasons that we love investing in real estate and in rental property specifically is because it is a critical need for the government. It's a critical need for the government and that at the baseline of why you see the government supporting initiatives to help housing if housing is ever threatened. And so that's not going to change. Housing is going to continue to be a critical need for the government. Could they make changes and, you know, and make it more difficult on real estate investors? Sure, they could do that across any asset out there. Um, but here and now there is, there are some of the best tax advantages for owning rental properties as you pass them along to future generations and not enough people know about it. So where we stand right now is such a tax advantaged. asset and it doesn't even get credit for it. We don't, it probably didn't even factor into any of the decisions that we probably have hundreds of collective properties that are owned on this by the folks that are on this call. And I would imagine very few of you even knew what an advantage you have as far as passing along inherited properties. What I'm speaking of is the step up in basis, which basically allows you to have your properties appreciate while you own them and while you're living. And then when you pass them on to your heirs, your heirs don't have to pay the taxes on the capital gains. The basis steps up, which just means that if you had sold those properties while you were living, you would have had to pay taxes on them. And when they are inherited by your heirs, there's a step up in basis, which means your heirs don't need to pay the taxes on them. That's, I mean, if you're thinking about legacy planning and estate planning, Oh my gosh. That is equal to hundreds of thousands of dollars, millions of dollars, depending on how large of a portfolio, a rental property portfolio you have. So, you know, I, I focus on the here and now it could, it happened, Mike, I think it's a fair question, a fair point. I think all assets probably have a risk of that, but here and now we are investing in an asset that is truly special when it comes to tax savings and tax advantages along with those other five profit centers. And so that's where I would put most of my focus.
Pablo Gonzalez:Yeah. Agreed. And Mark Norman was asking about that. Do we think that that step up in basis will go away at the end of the day? We don't have a crystal ball. We just know that right now there's a step up in basis in real estate. Other assets don't really benefit from that. is that, yeah,
Gregg Cohen:absolutely. I, you know, every election cycle I hear about some rumbling about the step up in basis being taken away. I heard about it, you know, the last election cycle and the one previous to that, and we'll probably hear about it on this election cycle too. That is such a major shift that I haven't heard anything this election cycle yet talking about it. not saying it can't happen, but that would be a major, major shift and like I said, I haven't heard anything about it. I don't spend too much time thinking about the hypotheticals and things like that. You can run yourself crazy doing that.
Pablo Gonzalez:Yeah. So let's bring this home. Do you see, we talked about this idea of if you are a boomer, what is the smartest move going forward? I want to, I want to bring to light what Jason Randall put here in the chat saying money that is, it has that is inherited, has a good chance of getting pissed away. Like lottery wins. Easy come, easy go. So That being said, if we're thinking about this idea of there's already this advantage of the step up basis, right? So if you're leaving something behind leaving something behind that's tax advantaged, Victor Rader saying, which is why our kids will likely cash out and reinvest wherever, you know, to me, I look at that a little bit differently. I see as, I see as this combination of the step up basis, And the fact that real estate performs a certain way and gives you more options as you, as it grows, as giving the next generation, the ability to not just inherit a pile of money that will get taxed. And, you know, you got to do some, if you're going to reinvest it, you're definitely going to get taxed or whatnot. But if you were to leave behind, You know what you would talk about this army of cash flow producing income properties You're not just leaving behind something that is easy come easy go You're leaving behind something that is its own little right like let's say I have 10 kids and I have 10 properties and they each get A property everybody everybody gets their own kind of like cash generation machine everybody almost like inherits their own little business that has the ability to either spit cash for them or allows them to refinance and invest that money into other things without getting taxed on taking the money out. Right. Or allows you to cash out and do a 10 31 exchange and invest in more real estate and grow the pie at a tax advantaged position. So. It just feels to me that if I was a boomer and I was thinking of what I'm, what I'm leaving, and I don't even know if boomers a bad word. If I was in the baby boomer generation, right? Like, I feel like the, the, the term boomer gets maligned. Right. But like, if I'm, if I'm in this generation where I'm thinking, all right, you know, I'm, I'm within 20 years of Of my mortality, according to statistics, and I have amassed a certain amount of wealth. I'm thinking deeply about what I want to leave my kids behind. I would start that conversation today of, Hey, do you, are you going to want. 400, 000 worth of stuff that you can sell or not sell that goes up or down? Or do you want something that's worth 400, 000 that spits off cashflow that you're able to refinance if you wanted to take money out to invest in other things or, or do something for yourself, or you're able to, you know, take that step up in basis and go acquire more of it kind of tax free. That, that would be what I'd be thinking.
Gregg Cohen:I love that. I, I really think it would be a great exercise for people of whatever generation you're a part of right now to sit down and think about how you want to pass what you are going to pass along monetarily to, to the next generation, just like you were talking about and leave the labels off of it. Meaning, describe what you would like to leave, how that will perform without talking about whether it's stocks, bonds, real estate, crypto, whatever. And just describe it. And, you know, you would probably say things like, you know, you're thinking about taxes. Well, I want it to be tax advantaged, right? I want to make sure that the, my future generations aren't burdened by an overwhelming tax burden and they pay their fair share. But if there's tax advantages, that's, that's really. I'd love for it to be producing cash flow for that next generation because I think that will ease my next generation's burden of how are they living their lives. Whether that is helping them support paycheck to paycheck, which is what most families in this country are, or maybe you're able to help them decide on a career that they truly can follow their passion because not only are they able to survive paycheck to paycheck, but your investment that you're leaving them, give them that extra bump. Which changes their lives and allows them to follow their passion. Right? Maybe you might describe, Hey, listen, I want to leave some financial education, some built in financial education and business ownership, entrepreneurship to my next generation. And a rental property or a portfolio of rental properties is a beautiful business in itself. It's small and it's manageable. And I get to talk about it with my kids who are 10 and 12. We talk about the business of owning a rental property. And it's, it just is, it makes sense to a 10 year old and a 12 year old. And that's part of the beauty of investing in rental properties. We understand it. People need housing. They want to pay rent to live in the house. We get it. So maybe, maybe those are things that you would describe of the money and the assets that you want to leave to your future generation. And after you get done describing those things, then go and line up Does that mean I want more stocks, more bonds, more real estate, more crypto, more whatever it may be? But start first by thinking about the benefits of it. I think if most people did that, there would be a much bigger seat at the table for real estate. And then what you should do is if, if that's where you land, then start to educate yourself. And I love that you guys are here. We have, we've had, you know, 70, 80, 90 folks here in the middle of summer talking about, you know, retirement planning and this great transfer of wealth. This is unique. And I love this. This is where it becomes possible to take advantage both from the side of maybe the boomer who is leaving that legacy. And from the millennial who is receiving that legacy because it starts with education and conversation. And if you want real estate to be a part of what you're going to leave forward to your generations, you want it to be a smooth and enjoyable process. They've got to be a part of a community like this. You've got to have those conversations so that you're empowering that future generation and that it doesn't lead to heartache at the time of bankruptcy. of passing. So I just think there is so much potential here for this to be a beautiful transfer of wealth to, to future generations. But I think to the comment that was made before as well, the other side of it is also true, right? That the idea of a have and a have not, we think of it monetarily, but there's the idea of the have and have not from an education perspective. And people have the opportunity to educate themselves right now to set their families up for the greatest transfer of wealth. We know not everybody's going to take advantage of that. So I applaud everybody here for being a part of this call. Thank you guys for letting us kick it and talk about these things. And I would encourage you to talk about it with your friends and your family, because this is coming and largely how we act and how we choose to educate ourselves will determine how much advantage we can take of it.
Pablo Gonzalez:That is uh, maybe three of the best minutes you've ever had on this show, bud. I applaud you for that. Really well summarized. I'm just going to, I'm just going to end it with. If you either see the fact that this big transfer of real estate is going to affect things in the way that real estate prices are going to go up and you want to get in, you want to take advantage of this new incentive that's happening with JWB or you are somebody that already has a retirement portfolio set up and you're thinking about shifting some assets in there to create this condition. For the next generation, allow them to take advantage of this stuff. Go to chat with JWB. com shoot an an email to info at JWB companies. com. What was that number again? Nine Oh four, six, seven, seven, six, seven, seven, seven. You nailed it. Even I can remember it. You see. All right, cool. Make that call. good job, buddy. Good job. Good job. Prepare for this, man. I really, I really like how you landed that thing. It makes me really hopeful that this broken system of retirement and these horrible stats that we're seeing, maybe, maybe there, maybe there's a light at the end of the tunnel in this, in this generational transfer, and You know how I see it, right? I think the internet's the light, right? Like, I think more and more good behavior will continue to happen because of the internet. People will know that real estate is this asset class that does this at a higher rate. People will understand that completely passive turnkey rental property investing can happen because there's vertically integrated providers in there that can provide a great experience like JWB. And people will know that when they are handing down this, these legacies, they're able to set their future generation up to have not just like a pile of cash. That's easy to go spend instead, a nice functioning business is going to be, you know, difficult to talk yourself into dismantling which I think would be really, really interesting, man. So definitely pumped that we had 90 people here today middle of summer. I know that we normally have dog days of summer attendance goes down clear that this is something that's on people's mind. Yeah. Really great questions, really great contribution from the community. You all are the reason why this show is what it is and why we do it. So thanks for continuing to show up and continue to, you know, like bring the great stuff and shout out to Frank who came up with the topic, right? Frank from the JWB sales floor said, this is important to my people, the people that I'm talking to. And we should talk about this and team JWB given us, given us insights from what they're hearing on the phones is super, super valuable. Do you see any, anything, anything else you want to highlight?
Gregg Cohen:love everything you said. Super appreciative for our entire community and a Frank and just, just a, an open invitation. When you see things that matter to you guys, it is so quick for Pablo and I to get an email or in the WhatsApp chat. You guys say it's important to you. There's a really high likelihood that we're going to put it on a show pretty quickly. So thank you to Frank. Thank you in advance to all of you. And keep sending those ideas cause that's what makes this show special. So thank you guys.
Pablo Gonzalez:Yeah. Hope to see y'all next week. We've got a couple of cool shows coming up next week. We're, we're talking about it's not Travage Insights. Typical, right? Like there is stuff about Pope Powell pointing towards progress. There's this a real estate fund that's bleeding billions. And what that means, we're going to dive deeper into this rate buy down and do some math around it, help you understand that. So next week is going to be a real topical show of, of interesting topics. And after that McKenzie put out this report about the blueprint for the new real estate investing edge, we're going to break that down and we're going to talk about that so that we can take McKenzie's brilliant minds and contextualize it a little bit with our with GCs. Genius mind and then my noble fool mind. But from now until then, do you see any advice for folks? Don't be average. See you next week.