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Real Estate Cash Flow vs. Stock Cash Flow
• 45 minIn this podcast episode, Keith Weinhold and Kirk Chisholm discuss the differences between real estate and stock investing. Kirk Chisholm is the Principal of Innovative Advisory Group. He provides his perspective as a wealth manager, emphasizing the control and lower risk offered by alternative assets like real estate. Learn the difference between risk and volatility. We discuss risk-adjusted returns, liquidity, and the importance of understanding and managing risk. The conversation also covers cash flow, dividends, big tech stocks, and private mortgages. Interest rates and inflation—we discuss their future. Kirk believes rates will stay at this higher rate for a long time. Timestamps: The Paradigm Shift in Interest Rates and Inflation [00:00:01] Discussion on the new paradigm of interest rates and inflation and how it affects real estate and stock investors. The Impact of Front Porches on Society [00:01:35] Exploration of the impact of the disappearance of front porches on neighborhoods and communities. The Definition and Management of Risk in Investments [00:05:50] Explanation of how risk is defined and managed in different types of investments, including stocks, real estate, and alternative assets. The difference between volatility and risk [00:10:21] Explanation of the temporary price movements (volatility) and permanent impairment of capital (risk) in different investment assets. The illiquidity of real estate and non-traded REITs [00:13:11] Discussion on the illiquidity of real estate compared to publicly traded markets and the example of non-traded REITs during the 2008 financial crisis. Importance of cash flow and dividends in stock investments [00:15:26] Exploration of the two camps in stock investing: cash flow-driven investors and appreciation-driven investors, and the significance of dividends and cash flow in stock investments. Dividend Stocks and Value Stocks [00:20:17] Explanation of the difference between growth stocks and value stocks, with a focus on dividend-paying stocks. Private Mortgages and Cash Flow [00:21:12] Discussion on the benefits of investing in private mortgages and how it provides a passive income stream. Default Rates on Hard Money Loans [00:25:48] Exploration of the default rates on hard money loans and the industry's approach to mitigating risks for both borrowers and lenders. The new paradigm of interest rates and inflation [00:31:32] Kirk Chisholm discusses the shift in the economic paradigm from low interest rates and inflation to higher rates and a shrinking economy. The impact of higher rates on mortgages and real estate [00:35:39] Kirk explains how higher interest rates affect mortgage payments and housing affordability, leading to a decline in house prices. The consequences of higher rates on corporate America [00:37:48] Kirk discusses how higher rates can impact corporations, particularly those with short-term debt, potentially leading to bankruptcies and market clean-up. Higher rates and recession correlation [00:39:55] Discussion on the correlation between recessions and lowering of interest rates, and why it may not happen in the future due to high inflation. Fed's focus on stable prices [00:42:48] The Federal Reserve's prioritization of stable prices over high employment, within their dual mandate. Interest rates and the economy [00:44:10] The potential impact of higher interest rates on the economy, with a discussion on when the next recession may occur. Resources mentioned: Show Notes: www.GetRichEducation.com/460 Innovative Advisory Group: www.InnovativeWealth.com Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE or e-mail: info@RidgeLendingGroup.com Find cash-flowing Jacksonville property at: www.JWBrealestate.com/GRE Invest with Freedom Family Investments. You get paid first: Text ‘FAMILY’ to 66866 Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review” Top Properties & Providers: GREmarketplace.com GRE Free Investment Coaching: GREmarketplace.com/Coach Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free— text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation Keith’s personal Instagram: @keithweinhold Complete episode transcript: Keith Weinhold (00:00:01) - Welcome to. I'm your host, Keith White. As a real estate investor, you are highly cognizant of your cash flows to stock investors. Even think about that and how we've now entered a completely new paradigm of interest rates and inflation and how to respond today on Get Rich Education with real estate capital Jacksonville. Real estate has outperformed the stock market by 44% over the last 20 years. It's proven to be a more stable asset, especially during recessions. Their vertically integrated strategy has led to 79% more home price appreciation compared to the average Jacksonville investor since 2013. GPB is ready to help your money make money and to make it easy for everyday investors. Get started at GWB Real estate. Agree that's GWB Real estate. Agree. Speaker 2 (00:00:59) - You're listening to the show that has created more financial freedom than nearly any show in the world. This is Get rich education. Keith Weinhold (00:01:22) - What category? From Bogota, Colombia, to Wichita, Kansas, and across 188 nations worldwide. You are back in that abundantly minded place where financially free beats debt free. Keith Weinhold (00:01:35) - And by now you might have already won the inflation Triple Crown. I'm your host, Keith Wild. Hey, Noah, is this a real estate problem? Philip Gulley, the author of Porch Talk. He said, I believe all that is wrong with the world can be attributed to the shortage of front porches and the talks we had on them. Somewhere around 1950, builders left off the front porch to save money, and we've had nothing but problems ever since. That's just the sort of thing that I think about now as you and I are enjoying the dog days of summer, as I trust that you are, you know, neighborhoods, property, it all used to be more wide open. The Pennsylvania house that I grew up in and that my parents still live in, it has a real front porch. And no one I mean, nobody has fences around their yard either. It is a real lemonade sipping chat with the neighbors vibe there that, well, seems to be more and more of a remnant of yesteryear. Keith Weinhold (00:02:44) - I mean, gosh, from what I can see, there are more and more gated communities. Uh, people tend to get more concerned about security and that often means that they trade away freedom. Hey, well, our guest on the show today, he hits differently. And you're going to feel that because he's the principal of a firm that helps investors with stocks, bonds and mutual funds, as well as real estate investing. And it's not just REITs, real estate investment trusts, but more than that. And, you know, whenever he and I talk, we tend to get each other thinking in different ways, in shape, each other's opinions somewhat, as you'll probably see again today. He and I disagree on some things and we agree on others. I'm going to ask him about whether or not stock investors even care about cash flow. We'll be sure to get his insights on the direction of interest rates and inflation and more. Well, I'd like to welcome in our guest today he runs innovative wealth.com he's the principle and a wealth manager there at innovative advisory group. Keith Weinhold (00:03:54) - They're based in Massachusetts but they advise well beyond any state borders. Hey it's been a few years. It's great to have you back. Kirk Chisholm Thanks for inviting me back. Keith. I was a little worried there didn't appear well in your show, but thanks for having me back. Yeah, well, it's been absolutely too long, and I really appreciate your perspective because they're with what you do. You're principal of a company that helps people invest in a big, wide palette of things, from stocks to private mortgages and some things with real estate and elsewhere. So you have this really broad view. So tell us what percentage of your business is is stocks, bonds and their derivative products like ETFs and mutual funds versus everything else? It's interesting because my industry is primarily focused on stocks, bonds and mutual funds. It always has been, probably always will be, in large part because they're easy to sell, They're publicly available information and everyone is can simply just click a button and get it done. So my industry tends to work towards lazy solutions or simple solutions. Keith Weinhold (00:05:00) - Nothing wrong with that. You just have to know with what you're getting. It's funny, when we started our firm in 2008, we were doing a lot of private mortgages and we talked to the regulators at the time and they said, Oh, well, what percentage of your accounts in alternatives? Because we told them we did alternatives like what percentage of your accounts? And we said, Yeah, somewhere like 40 to 50%. You know, it probably ranges between 40 and 60. You could hear a pin drop in that room. I did pick the lady's mouth off the floor like she couldn't believe that. How quote unquote, risky that is. And she said the first question, she's like, are you serious? Isn't that really risky? And I started laughing and I said, risky? You mean like Worldcom, Enron, AIG, Tyco, You know, like Lehman Brothers, Bear Stearns? They just kept going on and on. She's like, all right, I get the point. And we had to define the concept of risk. Keith Weinhold (00:05:50) - This is the part that your audience will appreciate, right? If you're investing in a company, it's been screened by the SEC. It's passed certain muster. It's SEC doesn't endorse it, but it's passed certain muster. You say, all right,
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