239: Where is the Economy Headed?

SHOW NOTES FOR EPISODE 239: WHERE IS THE ECONOMY HEADED?

When real estate investor and financial newsletter writer Daniel Ameduri began warning friends and family in 2007 about the coming market crash, not everyone listened.  Those who listened not only avoided great loses but some even profited in the rapidly shifting market.  In this podcast episode, Daniel shares his story as a real estate investor during the 2008 economic crisis, reveals insights about the upcoming market correction and discusses things you can do now to prepare for that inevitable market shift.

What You Will Learn

• What he able to predict the 2008 market crash almost to the day
• How he was able to grow his real estate portfolio to financial independence with a terrible credit score
• What key lessons he learned from the 2008 crash that helped him become a multimillionaire today
• How his cash flow allows him to travel with his family (they visited 10 countries in just one year)
• What is going to happen to the US economy in the next 2-3 years
• How you can still find seller financing in today’s sellers market
• Why it’s better to sometimes just do nothing

About Our Guest

Daniel Ameduri

Daniel Ameduri is a self-made multi-millionaire, full-time fact finder and proud father of three, who credits his success to a strong desire to surround himself with the right people.  Daniel has been in real-estate for 20 years and has owned over 50 properties in various parts of the country including, Texas, California, Tennessee, Idaho, etc. as well as multifamily units.  After warning family and friends in 2007 about the coming market and mortgage collapse, he started his own YouTube channel, VisionVictory, which has received 10 million video views.   On March 18, 2008, Daniel predicted the Dow would reach 8,000, the collapse of Lehman Brothers, AIG, and Washington Mutual.  During the mortgage crisis, he helped people buy Put Options on Countrywide Mortgage… these Put Options saw a gain of 1,400%.  Not listening to his own advice, Daniel made a bad bet with Southern California’s real estate market which wiped out his entire income and savings, leaving him broke.  With a special focus and passion for personal finance, he re-built his wealth and declared financial independence in 2012.  Having no personal mortgage and enough rental properties to pay for his life style, he was able to build his business larger than he could have ever imagined — by NOT focusing on money, but by focusing on over delivering value to his customers.  He is the co-founder of the Future Money Trends Newsletter, FMT Advisory, and Crush The Street.

More About Daniel

• Started investing in real estate at 18 years of age (he’s 37 today)
• Saw his first house going up $10K per month in value!
• His main focus today is his personal finance newsletter
• Shares a lot on his personal struggles
• Shares various investment and savings ideas and vehicles
• Majority of his days are spent reading/researching
• Still enjoys real estate investing part-time
  • Shares specific criteria of what he is looking for in a real estate investment with a few key Realtors
  • His Realtors know that if those types of properties show up, he will close quickly
  • Last Wednesday, he got a call from a Realtor with had a distressed seller and Daniel issued a check within 24 hours
  • Could easily live off of income generated from his real estate investments
  • Is paying down his mortgages from cash flow
  • His current real estate cash flow generates six figures annually
  • His secret is having minimal personal expenses

How he Predicted the 2008 Financial Crisis

• He was out knocking on doors looking for foreclosures in 2006 for his real estate business and noticed the default list was growing bigger and bigger 2006-2007
• He was a loan officer but was only doing his own loans, where he was seeing who was in charge of all the funds
• Noticed that Lehman Brothers was the originator of many mortgages that got flipped over to Freddie Mae and Freddie Mac Federal Housing Finance Agency loans and they were coming up on a lot of defaults
• He was also researching and reading a lot about the economy at the time
• Was studying Austrian Economics
• He got his family to pull all their money out of the stock market and sell all their real estate
• Created a YouTube video in March of 2008 where he predicted Washington Mutual and AIG would collapse, along with Fannie Mae and Freddie Mac in the fall of 2008 – it happened in September 2008
• Even though he made money shorting the mortgage giants, he failed to sell his own real estate holdings ($3 million in mortgages and $4 million in real estate BEFORE the crash in 2006) and he lost big there.  His credit was destroyed
• Because of his credit, he has only done seller financing for the last 10 years
• The next 10 years, his real estate buying was very different – based on low leverage, high capitalization – much safer, much more stable.  Only bought highly distressed properties
• He’s glad it happened in his 20s because he learned an important lesson

Biggest Mistake

• Became under capitalized, spread too thin
• Buying real estate only for appreciation
• You want appreciation but you NEED good cash flow first

Biggest Success

• Because his credit was destroyed, he was forced to learn seller financing to obtain real estate – this he saw as his biggest success
• By truly understanding the opportunity in owner/seller financing (both as buyer and seller) – he could get great deals WITHOUT a mortgage
• As seller, he gets a higher price for the property and an 8% yield
• He loves the art of a deal where you can negotiate everything
• Finding seller financing deals today:
  • Not heavily advertised today except maybe in the Southern US states
  • He creates his own opportunities by finding a distressed seller who is 5 days away from foreclosure or find a distressed property, which is much easier
    • SELLER FINANCE TIP!  For example, properties with foundation problems in Texas cannot get a mortgage loan
      • Daniel has found that most foundation problems are easier and less expensive to fix than most people realize
        • He found that most are around $3-5K to fix
        • Sellers find that no one is interested in their house because it has a foundation problem
        • He goes to the seller and says, “You’re trying to get $10-20,000 out of the property.  I will give you the money you want and you transfer the property to me.”  You keep their financing in place
        • Disclaimer: There is a “due on sales” clause but, according to Daniel, this has never been used in the history of real estate (he made it clear, however, that this is NOT  legal advice)
        • He pays their mortgage (with a 1-5 year balloon payment), fix and flips it – but he doesn’t do that for rentals
        • His typical Seller Financing deal:
          • He lets the seller know that he has done this dozens of times
          • Gives owner their $10-20K
          • The property is legally Daniels
          • He makes mortgage payments for a year (a wrap or assumable loan)
        • Often “distressed houses” come with “distressed sellers”
        • Actual “distressed seller” situations
          • Seller in divorce with in-laws living in the house
          • Didn’t make mortgage payment because of a relationship dispute
        • Easier to find “distressed properties” today than “distressed sellers”
          • Just look for notes in the MLS citing “foundation problems”
    • Doesn’t pursue “pre-foreclosures” anymore
    • For him to make any money on a deal, he needs a 30-40% discount off market price
    • He doesn’t send out direct mail or post “bandit signs” (the signs that say “We Buy Houses”)
    • He does use “bird dogs” (people who are paid to look for homes for you that are distressed)
    • He also lets people who do send out direct mail or post bandit signs that he has cash to buy the right deal

Advice for Old Dawgs Interested in Investing in Real Estate

• There’s nothing wrong with “doing nothing”
• “Sometimes, the best thing I’ve done is to do nothing.”  – Jim Rodgers, leading investor
• If you don’t see the right opportunity, don’t buy – wait!
• Alligator investors wait until that perfect moment
• Warren Buffet closed his fund down because he couldn’t find any good value in the market in the 60s
• On finding investments
  • Stick with what you know
  • Be patient
  • Go slow
  • Some years, he’ll only buy one property, others ten – this year, he has only bought two
  • Crowd Funding – he uses Peer Street, Fundrise, Realty Mogul
  • Single family homes
• Set-up realistic expectations
• Always pad your expenses
• Under-price what you are going to sell your property for
• You are the only one you can trust in these transactions

Where His Business is Going

• His real passion is his family
• Loves travel – trying to let his kids see the world – been to 10 countries in the last year
• On his business, it’s a lifestyle for hin
  • Considers it a selfish joy that he can read about money all day and share it on his newsletter
  • Plans to build Future Money Trends newsletter
  • Is trying to make contact with all his subscribers (free subscription)
  • His goal: Would love to show up at a conference 20-30 years from now, and sit down with 100 to 1,000 millionaires who have become financially independent because they have read and practiced the recommendations and ideas he has presented in his newsletter

Thoughts on Today’s Economy

• There are some systemic risks today because of interest rates and debt
• Economic boom has a cost
• We’re going to borrow a trillion dollars over the next year
• He likes the sustainability of how the recent economic growth is happening
• Since 2008 crisis, we’ve seen a lot of third-party intervention from central planners
  • Central banks are buying stocks, bonds, even bad bonds
• Government is spending trillions of dollars on all sorts of government programs that eventually have a dead end
• With the tax cut and the roll-back of regulations, the new jobs that are being created are actually sustainable jobs that have a market force behind them that comes from people’s money and spendable power
• The roll-back of regulations has allowed businesses to prosper
• He suspects we still have a few good years ahead (2-3 years) in the markets mainly because people keep pointing out that the bull market is “old and ready to die.”  According to Daniel, that’s just not how bull markets end – bull markets end in euphoria!
• Bitcoin – 6 months or a year ago, people were talking about Bitcoin at $20,000 a bitcoin and then it crashed to $4-5,000.
• In 2007, you’d read stories in the newspaper about people camping around the block, to get in line for the next KB Development Home, in Riverside County, California.  That’s how bull markets end!
• According to Daniel, the Dow is going to 30-50,000 before the bull market ends
• It’s impossible to predict exactly when the bull market will end but we will see some sort of “inflationary shock to the system” because of where interest rates are and because of all the debt that cannot be paid back
• He recently talked with a US Congressman about the debt, student loan debt, etc. who said, “It cannot be fixed, so the plan is to just keep going unit we have to do something.”
• When it does reset, it’s going to be ugly so why not just keep partying till it ends?
• Getting a balanced budget is impossible at this point
• If you look at Social Security spending, Medicare, entitlements and interest on debt, you’ll see that those things suck up the income of the US – one third of the income comes from income taxes and rest from a bunch or other taxes and now the tariffs
• The entire federal government budget (federal employee salaries, military, etc.) is borrowed!
• Nonetheless, he is optimistic and hopeful that, between technology and a real economy, somehow we can overcome this
• The nice thing about all this is that it’s not as if the US implodes itself economically while the rest of the world just watches — everyone, all other countries, will be impacted if the US goes down
• Everyone in power around the world has too much at stake and too much to lose so they will want to do whatever they have to to prevent an economic disaster in the US
• The economic crisis will not be like what happened in Venezuela’s economic crisis but more like a “managed reset”
• There may even be a “debt jubilee” for global governments around the world (where all countries with forgive each other’s debt) because we are not the only big country in serious debt
• “The US dollar is the tallest midget in the room,” according to Hank Paulson, the Treasurer Secretary during the 2008 housing crisis.  It’s not that it’s the best currency in the world, just the best out of a lot of bad ones

Rap it Up

• Favorite real estate book: The Millionaire Real Estate Investor by Gary Keller
• Favorite business book: Rich Dad Poor Dad by Robert Kiyosaki
• Most valuable web site for success (other than your own): Craigslist
• Favorite app: Zillow
• If you had to start all over, knowing what you know, and you only had $1,000, what would you do to launch your real estate investing business? Would find good deals and spend the $1,000 on nice dinners with wealthy people whom he would present the deals and partner up.

How You Can Reach Daniel

• FutureMoneyTrends.com (can subscribe free to Daniel’s newsletter)

IF YOU LIKED THIS PODCAST, we would love if you would go to iTunes, Stitcher or GooglePlay and Subscribe, Rate & Review our podcast.  This will greatly help in sharing this podcast with others seeking to learn real estate investing as a means to achieve a successful retirement.

Check out our other podcasts at olddawgsreinetwork.com.

Get a FREE copy of our 3-Minute Rental Property Analyzer at olddawgsreinetwork.com.

Episode Sponsor: Meno Studio – menostudio777@gmail.com