Should you sell, buy or rent?

Lance: Welcome to the Lance Wallnau Show. Today, we’ve got great news for you. Economic forecasts are of course gloomy. We’re looking at this apocalyptic scenario of potential food shortages, energy shortages by government design no less. It’s almost like the devil was running the United States you would think. Then we have wars and rumors of wars and inflation and high interest rates. So, here’s the good news. The good news is that the Bible promises, everything that can be shaken will be shaken. There’ll be periods of time is shaking. But then the Lord says,“I’m the one behind the shaking even though it looks like it’s human beings, because I’m changing the status quo”. 

And I’m building my own supernatural house. My own supernatural body and my own supernatural interests are being advanced. And I am practical the Lord says, in Hosea, in Haggai and the silver and the gold is mine. Meaning that in the midst of shaking of governments and economies and nations God still said that he’s in control of the currency of faith and the currency of provision for his people. And we see this in the Bible when there was a famine for instance in the book of Acts. God used it in Jerusalem to endear the hearts of the Jews to the Gentiles,because the Gentiles provided for the relief of the church in Jerusalem. And what that tells you is the body of Christ is the connected tissue for the body of Christ.

It’s not just in terms of physical resources, it’s in terms of Revelation and anointing and insight. The body of Christ is helping the body of Christ. I think I’ve often thought Mercedes Sparks that there would come a time when the global body of Christ is going to have the same phenomena.Where one part of the world is going to need the help of another part and the church in different parts of the world is going to help. Carl, we got you on the show today. Glad you’re here where we’re going to bring in right now our special guest Karen Conrad Metcalf, CEO of Karen Conrad Enterprises.

I think it’s especially exciting to have you Karen, because I’ve worked with you for a couple of years with people hear me talk about cousin, Cousin Billy. Now cousin Billy is one of those guys that is a wealth mentor and I guess he had a role in your life too. Because just you make wise choices Karen all the time and what you do and the cousin Billy in real estate cousin Billy in investment banking and his own way. The guy is just like a maven. He’s a wealth creator. I’m always talking about my cousin over there at Wealth Builders. But Karen, you work with him on the team at Wealth Builders and you started taking interest in real estate just a couple years ago.Now, you’ve got, you and your husband and you’re not realtors by background but you got a couple of properties already and you’re doing this as a family. It’s working for you even in this economy we’re in now, am I correct?

Karen Conrad: You are correct and yeah, I agree. Boy, Billy and Becky have had such an impact in our lives and I’m really blessed to be vice president of the organization, Wealth Builders. Just based on that and I’ve had a little background in real estate. Being a real estate agent. We really saw that even though during this time, it might seem difficult or maybe people are sort of backing away from the possibility of investing in real estate. We’re seeing that there couldn’t be a better time to invest in real estate. So yeah, we’ve gone kind of from zero to hero, you might say in real estate in a very short period of time.

Lance: I find that hard to believe. Mercedes, you have, I know you got a lot of questions and thoughts on this because the financial focus was really a lot of Mercedes discussion with me and we’ve been going and I think it makes a lot of sense that we should be going there. but I mean that that that surprises me. Doesn’t it surprise you when you hear that real estate’s the place to go when everybody’s telling me real the place to run from.

Mercedes: Yeah, well I think there’s still and Karen can probably speak to this amazingly. But there’s certain markets out there that are still really excellent for investing and the other thing with interest rates, right. I mean interest rates go up interest rates go down you can always refinance. So, when we’re looking at safe havens for your cash. I mean that’s really kind of a focus of this series is really when inflation’s going up the value of dollars going down, where can you put cash to protect it and for a couple years for the long term. So, Karen, I would love to hear, I mean, you were telling me earlier that you have a whole background in finance. Like you said, you’re working with Billy Epperhart with real estate investing and I remember having dinner with you guys a few months ago and I was just blown away by all of this passive income that you were making off of real estate properties.

So, that’s one of the reasons I wanted to have you on the show that hey, this is something that the viewers at home, they should be researching, looking into, and seeing if this is the right solution for them. So Karen, tell us what are you thinking with this financial outlook? Where are you seeing things going right now?

Karen Conrad: Well, history teaches us a lot. In the background that you’re referencing as I was in banking for 25 years before I moved to Colorado and then to Texas. And so during that time the 2008 to 2012, that difficult time with inflation, recession, housing issues, I was right in the thick of it right across the table from federal regulators talking about our portfolio and I learned a lot during that time. I think one of the important things is instead of jumping to the assumption that what we’re going in today is going to be similar to that. It’s really understanding what is going on in the market today, what is maybe similar to that time, but more importantly, what is different during this time.

There are some significant that I think people need to be aware of and I’m happy to go share some of those details with you on that. And then also, there are ways to keep safe in investing in real estate so that we don’t jump into what I call the appreciation vote where we are completely reliant on appreciation. That’s where people can get in trouble.

Speaker 3 Yeah, please tell us. I’d love to know the differences that you’re seeing in the market today.

Karen Conrad: Yeah, so the biggest difference be, there’s two differences, main Differences between that time and today. One of them is if you remember, those of you that were around which this group I think has been is a lot of the problems had to do with the bank loans that people were making. They were risky. They were interest only. The banks we would have our favorite appraisers and the ones that we knew would get our value for us on the property. So, the actual riskiness of the bank loans and the other loans people were taking on was a lot of the issue.

The second part is there was high supply compared to demand going into that time. So, what’s happening today is that the actual finance programs, alone programs are not risky like that. A matter of fact, they’re underwritten very tightly. There’s been a lot of tightness in the appraisal market that avoids like getting with that favorite appraiser to get the value. So, that’s a big part of it, but also the demand for homes is still high compared to the supply. When we look at the country, pretty much in every market, there is a very tight supply compared to demand.

So, when you think about it, there’s still much more a bigger number of buyers for every house that’s on the market and in that, there’s a reason for it. The main cause of that interest is new builds. If we go back to this last decade and we compare how many new builds we actually have compared to prior decades, it’s a difference of about 27.1 million but the last ten years as at about 5.8 million. So when you just take that fact alone and you realize like why is there this shortage in supply, it has a lot to do with new construction having slowed down.

Mercedes: Wow. And I want to throw this in and then Lance anything you want to ask. We’re at this unique time too where baby boomers are looking to downsize which is the largest generation and the millennials are really looking to purchase their kind of like forever home that they’re going to raise their family in. So, I think when you talk about demand on the market you have like the two largest generations both looking for homes right now which I think really limits supply. So, anyways, Lance, anything you want to ask?

Lance: Yeah. So, the other thing you said is about don’t go into the appreciation trap. So, amplify, I think I know what that is, but amplify for the audience what you’re talking about.

Karen Conrad: Yeah, a lot of times what people do investors, if they haven’t studied the market or gotten the information that we have as far as some guidelines on investing. It’s really easy to look at a market and say, hey, there was 22% appreciation in this market last year and bank on that without looking at additional exit strategies. And if I can just run a scenario by you and this is something that I saw happen before my eyes during this time that I was in banking is that,riding an appreciation market where people would buy a home, maybe rehab it, look to flip it.Maybe go into a 6-month arm, and then all at once interest rates raise, or they’re dependent upon in an appraisal. Their only exit strategy was to help for appreciation and that can get people in a lot of trouble.

So, one of the key things in investing and this is what we share actually through the real estate program at Wealth Builders is there is 4 criteria. That when you are looking at investing in real estate that you want to look at and stay within which is going to keep you safe regardless of what the interest rate market is. So, I’m just going to list those quickly and if you want to talk more about it, we can do that. But one of them is to stay between one and a half percent of a rental rate compared to the purchase price. A second one is if you’re going into a market, stay between three and four times the media income of that area. You always want to look at a 10 to 20% cash on cash with the money that you’re putting in. And then you always want to be in a position where if you’re doing a you have a minimum of $300 in net cash flow. When we stay within those guidelines, it really helps us stay safe no matter what the interest rate environment is.

The other thing that I always look at when Dave and I go in and Levi and we look to purchase, we are looking for a minimum of two exit strategies, ideally three exit strategies. And that is absolutely key to protect you from being completely reliant on the value of a property going up.

Lance: What does that mean an exit strategy? Give me an example of an exit strategy.

Karen Conrad: Yeah. So, exit strategies are certainly a sale. So, if I do a flip and I want to sell it in three months, that is an exit strategy and get my cash out that way. Another exit strategy would be to set it up as a buy and hold which is a long-term rental. When you look at a market, there’s ways that we teach you how to do that, how to analyze a market to see what that potential is for this buy and hold. Then a third one that we look at is vacation rentals, and that’s something that is not available in every market. But if you’ve got those three exit strategies and you can move your property around within those three, you’re going to be able to almost always find a way to make money on that property no matter what is going on in the market.

Lance: And you’re looking at $300 net a month, right. Is that what you mean?

Mercedes: Minimum.

Karen Conrad: Correct. After all the expenses.

Lance: Minimum. Well, I just came from San Diego speaking there and I get in the car and I had a piece of artwork given to me. So, I had to get a big Uber driver vehicle SUV and the guy that came and picked me up is from Iraq. He’s 28 years old and I find that yeah anyone from the Middle East and I frequently meet them of all obviously in the easiest place to meet them as driving around Washington or someplace like an Uber or Lyft. They’re very vocal about the United States. It’s remarkable how opinionated they are. And they’re opinionated in the sense that they came here for the advantage of coming here and they don’t like what they see happening here because it reminds them a lot of stuff that they saw back home.

I hear this from guys from South America too. But he said to me, these people. He said, ‘I’m 28 years old. These people that don’t like your country. They don’t like America.’ And he starts cussing about them. And I was sympathetic with him. He goes, ‘Let me tell you something. I come from Iraq. We came here when Saddam Hussein was in charge before the war. I come here with nothing. I got two properties already that I own and I’m going up to Chicago to get to buy my third. And I do the Uber just for fun and for play cash. My goal is to be without dependence on any job by the time I’m 33 and I’m on my way and real estate’s my strategy.’

I said, ‘Even right now.’ He said, ‘Even right now, I told you, I’m on my way to Chicago to pick up a property.’ So, what are you going to do with it? He said, ‘I’m going to rent it out. I’m going to rent it. I’m going to hold it. I’ve got positive cash flow and eventually I’m going to be able to sell it. And my strategy is to not have to work once I’m 33.’ He’s a foreigner and he’s talking about the hustle in America, the opportunity if you’re informed and educated and ambitious. It just reinstated my realization that those are the kinds of people that exist that actually regardless of the climate, will make it.

Karen Conrad: Absolutely. That’s really amazing Lance because before we went live I was just chatting Mercedes and I were visiting about this. It’s so important right now like you say it’s on purpose. Our government is teaching our young people that they’re victims, that they should be reliant on the government. And we need to teach our kids and grandkids that no, we are going to become independently wealthy just like what you describe. And there is a way to create wealth.It’s up to us to teach our children and our grandchildren how to do that. It’s so interesting that here this guy is coming over from the Middle East and he sees it because they didn’t have the opportunity for it. But there is an opportunity to create wealth, and actually I think now more than ever because of this move trying to get our young people in our country to think that they can’t do anything.

Those of us that know the Lord that know in any environment that we have the ability to create wealth matter of fact it’s his desire, then we gain the knowledge to do it. I believe that that is going to be the difference maker with this remnant that we talk about of people that are going forward that will bring the gospel to this world.

Mercedes: Definitely. Karen, I want to talk to you about people who are listening and they might be thinking, well, I don’t even have cash to start doing something like this or yeah, I have a little bit of cash but can I even do what Karen’s doing. Talk to them about like, are there strategies to do this and how much cash do you need to try to get started in real estate investing or long-term holds with this passive income you’re talking about?

Karen Conrad: Wow, that’s a great question, Mercedes and yes, there is many ways to get into real estate that don’t require a lot of cash. People do things like; they look around their house. They think, well, what’s in my hand and they sell to be able to purchase their first home. There’s a lot of programs out there and with a lot of people that maybe haven’t owned a home before.One of the best steps you can take is purchase a home for yourself. When you think about it, you’re paying rent to somebody, you’re paying off their mortgage, right. All the benefits that we’re talking about in real estate investing. When we rent a property, we are actually giving that landlord or that owner those benefits. But there’s many programs where people can get into their home, their first home for 0% down or little as 3% down.

Now, there’s a lot of ways that you can build capital for that. There’re other things if you’ve got a family member, a parent. I encourage parents like, wow, don’t wait until you die. Please like help your children and grandchildren along the way. And it can be as little as a 3% help with the down payment. You can do programs like that. You can raise money through wholesaling. There are all sorts of ways that you can earn money. And of the things that we get surprised at continually when we’re working with clients, we asked them to fill out a financial statement and they don’t think they have money to invest, but they do. Even people that maybe you’ve had your home for years and you thought, I didn’t think we could ever invest in real estate. What equity do you have in your home?

Mike Davis, one of the pastors that we work with that was just paycheck to paycheck and he got a hold of this, he almost had his house pay off. He took the equity out of his home, started in real estate, and he is living that life of being financially free that we’re talking about.

Mercedes: Wow. Because that, what you guys are talking about with the Uber driver in Iraq and then, the idea of passive income. Remember Billy, he had like, I think it was like three crosses or something like that. He taught, first basically, get out of debt and pay that off and then take the money you’re paying to the credit cards and then start basically saving it. Then you get to a point where he’s saying how much are you making a month and can you make that impassive income.That’s basically what the Uber driver was saying. It’s like this is what it cost me to live and I trade my time. He’s driving Uber, I’m trading my time for money I’m going a job I’m trading my time for money. So, how do we start creating wealth strategies which is what I love about what you guys teach at Wealth Builders is, how do I make that passive income where I don’t have to trade my time from anymore. I could on vacation. I could go to my daughter’s soccer game or homeschooler or all these things that we feel so limited by when we have to go work for somebody else. So, can you talk about that? I mean, just the idea of passive income and what that is?

Karen Conrad: Absolutely. So, what you’ve talked about Mercedes is the triple X and that’s something that Billy teaches on and I really encourage you to. He’s got a money mastery book. He’s got a brand-new book that just came out that. It’s God‘s Road to Financial Success, where he explains this. And that first X is thinking about getting out of debt that it’s okay to have a mortgage. So, a lot of times I talk to people and they think they have to pay everything off and it’s like that’s not the case and we talk a lot about pets not always popular. But there’s a way to leverage debt and it’s really important to understand that. The second X with passive income is basically replacing maybe it’s a W–2 income. Maybe you own a business and you work like Mercedes you explained it perfectly, you exchange your time for money. If you take that money and you work to replace that income through passive income, that’s where you hit that second X.

Now think about that you’re not dependent upon somebody giving you a performance review,right. You’re not dependent on how somebody runs a company. There’re so many advantages to that. And then he talks about the third X which is where You are not only replacing your income,but you get to the point where you have so much additional income in that passive category from your assets that you’re able to significantly bless people, ministries, and help further the kingdom of God. And that’s kind of that one, two, and three X.

Mercedes: Awesome. I love it. I love it.

Lance: Well, we have there’s what are the different strategies that are out there for people that are looking at the big picture. There are some stock markets really inflated. There’s a lot of bubbles but still pharmaceuticals. One thing is discouraging is you can always count on Raytheon and the military contractors that be prospering. So and there’s the commodities market,which is where you’re seeing gold, silver, and other precious metals going. There’s a wheat shortage right now. So, I know that there are billionaires in Indonesia that simply knew how to work with where bread and commodities were going and they could forecast it.

So, I just want to remind our people that during this period of time, the people that make it are the people that have knowledge and self-control and the ability to manage the mindset and the skill set at the same time. The skill set is learning and not freaking out and the mindset is realizing that it you have to start somewhere. You have to start where you are. It’s so often when we’re talking here, people, I don’t know why it is a Pentecostal start at this point of desperation. I don’t have anything. Why don’t you have anything? Seriously, why don’t you have anything?Maybe it’s time that you started putting a different demand on yourself and on the environment around you. And say, “Lord, I’m capable of doing anything. Show me what I can do now to acquire seed to sow and bread to eat”.

That’s what the Bible calls it, because I’ll tell you what. I sit around as an entrepreneur and I see opportunities all the time to make money. It’s like maybe it’s a Jewish thing. I see it. It’s all going to require work and in my calling, I’m not called to do everything I see but I look at that and I think someone else is driving by those same opportunities and they’re rehearsing themselves. How come they’re a victim and they don’t have anything. It starts with mindset. So, if you don’t have anything, stop the scarcity mentality that starts with talking about how you’ve got nothing.

Give you an example. I was through Levittown, Pennsylvania with my dad growing up. This is where a guy Andrew Levitt had a vision. GIs were coming back from World War two. They’re going to need cheap houses. They’re going to have families. So, he built the cheapest like global homes but he built them with driveways and sewage and heating systems. So, Levitt, Andrew Levitt built this in Philadelphia, in New York, and in New Jersey. My dad worked with the companies that put in all the oil in those companies, because they work with Andrew Levitt. They’re all World War two vets, looking at what America needed. They had nothing when they started.

I’m driving around him in the winter and he would do weird stuff like other people be going off and no, fishing. He drive around and be looking at the roofs of houses. I go, ‘Dad, what are you doing?’ He goes, ‘Do you see it?’ I go, ‘No’. He goes, ‘Look, it’s the middle of the winter. Snow everywhere, but on the roof of those houses.’ I said, ‘I don’t get it.’ He goes, ‘Don’t you see it son? That’s money going through the roof of those houses. These people are paying for oil and the heat is going right through the roof. Heat rises. Those roofs aren’t insulated.’ So he goes back home and just because this is what he would do. He designs a company, hires a contractor, gets some trucks. Next thing, he’s got a couple hundred-thousand-dollar business putting insulation in the roofs.

He can’t keep up with the business. You know his sales technique? He put guys on me that are young high school out of college photographing roofs and going up and showing people how much heat was coming out of their house and what a house looks like when it’s properly insulated. A picture of a house with snow on it. Boom, sales exploded. What I’m saying is, that’s the entrepreneurial gift the United States has. We have it here more than anywhere and we have opportunity. Karen, you’re a master at maintaining mindset if I had to say one thing is great about you is you practice the skills. You put them to work. You are always a learner, but you’re a learner that learns mastery. You waste no motions. You get the job done and you help people develop a mindset of possibility.

There’s something about you. It’s like my daughter Joy. She’s so fortunate to have worked with you in her formative years, because you are like working with Mary Poppins. You made it fun and you made it easy and you made a challenge at the same time. How can people stay in touch with you?

Karen Conrad: Oh, that’s so kind, Lance. Thank you. Well, reach out to me at any time. Go to “Karenconrad.net”. You can send an Email to info@karenconrad.net, and that’s just really kind Lance and I love that. I think today when I look around especially at our young people. I think God has put that entrepreneurial spirit in them and it’s so exciting to help foster that. I just encourage all of us with our families with our friends. Like God has got so many possibilities for us and this is a great time to be living in. I hope that we’ve encourage everybody today that you can do it and your best time is ahead of you.

Lance: The best time is ahead, and one thought, I don’t think we covered and I got to squeeze it in because it’s going to bother me if I don’t. Your son is involved with your business, isn’t he? It’s not the only thing he does. He’s got another job but he works with you and Dave in in these projects, right?

Karen Conrad: He sure does. He’s a big part of our team and he’s actually because of when he started, he’s actually very close already to that second X and that’s just been delightful. What’s great as a parent is we’re doing it together. It’s something that I know for generations. He’s going to carry that on and he is such an entrepreneur and we are having a blast as a family.

Lance: Well, that’s cool. Generational Wealth involve generational stewardship and it involves ideally generations working together. And in real estate, there’s a place where the kids go down and work on the house or they spot a property or they investigate. And the family comes together and together they’re actually curating wealth for the family. It’s a great business, a very I think Abraham Isaac and Jacob model. Thanks again Karen Conrad. I appreciate that. the wealth doesn’t evaporate in the world. It moves around and if you see America as I’m looking at it. If America’s in this cycle of divine discipline and if we’re in the era where the American influence in the world is shrinking, there’s still will be wealth in America.

The question is, who’s going to have access to it and God is giving you, because wealth is also a spiritual force. God has given you the ability to command it. I would say we the church has to start to look at the silver’s mine and the gold is mine and start to cooperate with the Holy Spirit. I never heard that frog.

Carl: Fully rely on God.

Lance: Fully rely on God, but that’s true. You’re going to have to fully rely upon God. Because you’re fully relying on God whether you realize it or not. On your deathbed you’re fully relying on God to take you to Heaven. Ain’t nothing you can do, other than surrender your soul. “Into thy hands I commit my spirit”. That’s what Jesus said. And he did it as our substance it so that you could live your life relying on God and what will God do. The Bible says, “The Holy Spirit worked with them.” So, all the Book of Acts was God working with and that word for, there’s a word for that.

The Holy Spirit working within the Greek. I used to remember what it was, but it literally means that the spirit of God comes alongside like he’s lifting a heavy object. You take one and he takes the other and you grunt in prayer, you grown maybe in the exertion but the power of God enables it to be moved through you and through providence. So, this is idea that it is going to be 100% you and it’s going to be 100% God and that doesn’t let either one off. Both have to show up to make it work. Thank you so much for watching and we’ll see you in the next episode. Bye–bye.

Closing: As follow up from the podcast here is a discount code for you to use that will give Lance’s audience $100 off of any Wealth Builders event. Go to www.wealthbuilders.org/eventand use the code Lance. See you tomorrow.