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537: Markets Do Not Behave Like Saber-Toothed Tigers.
You know, the longer I've been an investor, the more I realize this simple truth: the biggest threat to your wealth isn't the market… it's your own brain. We're all wired the same way—with instincts that were fantastic for avoiding saber-toothed tigers but are absolutely terrible for making good financial decisions. Take something simple like a marathon. If I asked you to predict next year's top finishers, you'd look at last year's results. That works. Human performance doesn't flip upside down in twelve months. The best runners tend to stay the best runners. There aren't that many variables to consider. When we try to apply that same logic to investing, it often blows up in our faces. There are way too many variables to consider when it comes to market behavior to make simple assumptions. Entire sectors rotate from darling to disaster in a heartbeat. Yet our brains keep telling us, "Hey, this worked last year, surely it'll work again." In my view, nowhere is that psychological mismatch more obvious than in real estate right now. A few years ago, when real estate was on fire—cheap debt, rising rents, deals getting snapped up before lunch—everybody wanted in. Fast-forward to today. We've had a rate shock. Values have reset. Properties are selling at steep discounts. And Construction starts have fallen off a cliff. Real estate got slaughtered. But look around now. The market has reset. Assets are selling 30 percent below where they did just after Covid. Jobs and population growth in places like the Carolinas, Texas, and Arizona look fantastic, and interest rates are falling quickly. Every macro indicator you can name is pointing to a major buying opportunity—one of the best in the last 15 years. So naturally… few people are paying attention. Markets that are bottomed out are not sexy. If it's not frothy, it's not newsworthy. This is human nature in a nutshell. When assets are expensive and risk is quietly rising, people feel brave. When assets are attractively priced, and future returns look great, people get scared. It's recency bias: assuming whatever just happened will keep happening. It's loss aversion: we fear losing a buck more than we enjoy making one. It's herd behavior: we'd rather be wrong with the crowd than right by ourselves. And of course, it's confirmation bias—where people seek out whatever headlines validate the emotions they're already feeling. It's not logical. It's not strategic. But it is human. And that's why this week's guest on Wealth Formula Podcast is of value to listen to. He's one of the leading experts in the world on investor psychology—someone who can explain, with real data, why even intelligent investors consistently jump into markets late, bail out early, misread risk, and miss the best opportunities… especially the ones sitting right in front of them. If you've ever wondered why you sometimes make brilliant decisions and other times do the financial equivalent of touching a hot stove twice, this conversation is going to hit home.
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536: Should You Own a Home?
Homeownership has been baked into the American Dream for nearly a century. Politicians, parents, and banks all tell you the same thing: “Buy a house as soon as you can. It’s your biggest asset.” But as a real estate guy who actually understands how wealth is created… I’m not convinced it makes sense for everyone—especially early in your career. Let me explain. Say you finally start making some real money—maybe you’re a doctor fresh out of residency. The cultural script kicks in immediately: Buy a house. Build equity. Feel responsible. But here’s the part most people forget: your primary home is not an asset. As Robert Kiyosaki puts it, if something takes money out of your pocket, it’s not an asset—it’s a liability. According to Bankrate and the Census Bureau, U.S. homeowners spend around $17,000 per year just to maintain and operate their homes—and that’s before you make a single mortgage payment. That’s property taxes, insurance, utilities, landscaping, repair bills, HOA fees… the list goes on. If your house is worth $1.5M, even the bare-minimum 1% annual maintenance rule hits you with $15,000 a year just to keep the place from deteriorating. Add insurance, taxes, utilities, and everything else, and you’re looking at $30,000–$40,000 per year in unavoidable, non-negotiable carrying costs. And that still doesn’t cover the roof that fails, the appliances that die, or the curveballs Mother Nature throws at you. None of that feels like an “asset” to me. Now, to be fair, people don’t usually buy homes as investments. They buy them for stability, a place to raise kids, a sense of being “settled.” It’s emotional. It’s psychological. And it’s real. But if you’re young—and especially if you haven’t hit your first million—it’s worth asking yourself a tough question: Is buying a home right now the best financial move… or just the most familiar one? Because historically, U.S. home prices appreciate around 4.3% a year (Case-Shiller). Meanwhile, the S&P 500 averages closer to 10%. And if you’re in real estate investing? A solid multifamily value-add deal often targets 16–20% IRR—plus tax advantages your primary home will never give you. So if you’re just getting started, it might make sense to delay that home purchase. Invest first. Build your passive income. Let your assets—not your salary—pay for your lifestyle. Then when you do buy a home, you’ll be doing it from a position of strength, not strain. The irony is this: waiting often gets you to the dream home faster because your capital compounds instead of being trapped in drywall, windows, and a backyard you barely have time to enjoy. This Week on Wealth Formula Podcast, I interview expert Dr. Ken Johnson, who digs even deeper into this question—and lays out why homeownership isn’t the golden ticket people think it is, especially for high earners early in their wealth-building years. Linked mentioned: Beracha and Johnson Housing Ranking Index: https://www.ares.org/page/beracha-johnson-housing-ranking-index Waller, Weeks and Johnson Rental Index: https://www.ares.org/page/waller-weeks-johnson-rental-index Price-to-Rent Ratio Report: https://therealestateinitiative.com/price-to-rent-ratios/ Top 100 Housing Markets – Inflation Adjusted: https://therealestateinitiative.com/housing-top-100/ Learn more about Dr. Ken Johnson: https://olemiss.edu/profiles/khjohns3
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42:37
536: Should You Own a Home?
Homeownership has been baked into the American Dream for nearly a century. Politicians, parents, and banks all tell you the same thing: "Buy a house as soon as you can. It's your biggest asset." But as a real estate guy who actually understands how wealth is created… I'm not convinced it makes sense for everyone—especially early in your career. Let me explain. Say you finally start making some real money—maybe you're a doctor fresh out of residency. The cultural script kicks in immediately: Buy a house. Build equity. Feel responsible. But here's the part most people forget: your primary home is not an asset. As Robert Kiyosaki puts it, if something takes money out of your pocket, it's not an asset—it's a liability. According to Bankrate and the Census Bureau, U.S. homeowners spend around $17,000 per year just to maintain and operate their homes—and that's before you make a single mortgage payment. That's property taxes, insurance, utilities, landscaping, repair bills, HOA fees… the list goes on. If your house is worth $1.5M, even the bare-minimum 1% annual maintenance rule hits you with $15,000 a year just to keep the place from deteriorating. Add insurance, taxes, utilities, and everything else, and you're looking at $30,000–$40,000 per year in unavoidable, non-negotiable carrying costs. And that still doesn't cover the roof that fails, the appliances that die, or the curveballs Mother Nature throws at you. None of that feels like an "asset" to me. Now, to be fair, people don't usually buy homes as investments. They buy them for stability, a place to raise kids, a sense of being "settled." It's emotional. It's psychological. And it's real. But if you're young—and especially if you haven't hit your first million—it's worth asking yourself a tough question: Is buying a home right now the best financial move… or just the most familiar one? Because historically, U.S. home prices appreciate around 4.3% a year (Case-Shiller). Meanwhile, the S&P 500 averages closer to 10%. And if you're in real estate investing? A solid multifamily value-add deal often targets 16–20% IRR—plus tax advantages your primary home will never give you. So if you're just getting started, it might make sense to delay that home purchase. Invest first. Build your passive income. Let your assets—not your salary—pay for your lifestyle. Then when you do buy a home, you'll be doing it from a position of strength, not strain. The irony is this: waiting often gets you to the dream home faster because your capital compounds instead of being trapped in drywall, windows, and a backyard you barely have time to enjoy. This Week on Wealth Formula Podcast, I interview expert Dr. Ken Johnson, who digs even deeper into this question—and lays out why homeownership isn't the golden ticket people think it is, especially for high earners early in their wealth-building years. Links mentioned: Beracha and Johnson Housing Ranking Index: https://www.ares.org/page/beracha-johnson-housing-ranking-index Waller, Weeks and Johnson Rental Index: https://www.ares.org/page/waller-weeks-johnson-rental-index Price-to-Rent Ratio Report: https://therealestateinitiative.com/price-to-rent-ratios/ Top 100 Housing Markets - Inflation Adjusted: https://therealestateinitiative.com/housing-top-100/ Learn more about Dr. Ken Johnson: https://olemiss.edu/profiles/khjohns3
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42:38
535: Apartment Buildings Are Having a Holiday Type Sale
It’s that time of the year again—Black Friday, Cyber Monday. Everyone loves a deal. If you’ve been investing long enough, you know one important fact: there is always something on sale. The problem is the herd never sees it. They’re too busy chasing whatever feels safe because it’s setting new records. And right now? That’s the stock market. That’s gold. Everyone’s piling into the most expensive things they can find and patting themselves on the back for being “prudent.” But smart investors don’t chase what’s already expensive.They look for the thing sitting quietly on the clearance rack, the thing nobody wants yet. And today, that thing is real estate—particularly apartments. We’ve seen this movie before. Think back to the early 2000s. After the dot-com crash, everybody ran to gold and Treasuries. Meanwhile, the very companies that would define the next two decades—Amazon, Apple, Microsoft—were sitting there marked down 75%. You didn’t need to be a genius to buy them. You just needed the stomach. Then there was 2009–2011. Real estate was radioactive. The media made it sound like apartment buildings were going to fall into sinkholes. But if you bought during that window? Values didn’t take ten years to recover. They snapped back within three. And then they kept running for another decade. And remember 2020—oil going negative? That’s the kind of insanity that only happens once in a generation. People were literally joking that Exxon would pay you to take barrels off their hands. It was absurd… and it was the greatest energy buying opportunity in modern history. But most people sat on the sidelines in fear. Different cycles, different assets, same principle:If you want outsized returns, you have to be willing to buy what everyone else is mispricing. And right now, the only major asset class not making all-time highs is real estate. In fact, our Investor Club is still finding deals discounted 30–40 percent from just a few years ago. Apartments, specifically, are in this bizarre sweet spot where pricing is still beaten up from the rate shock, yet the fundamentals underneath are quietly strengthening. Sellers who bought with floating debt are fatigued.Buyers with dry powder are getting real discounts.Construction has collapsed—meaning supply will be razor-thin in 18–24 months. And the interest-rate environment is shifting in exactly the direction apartments benefit from. This is why rates matter.This is why liquidity matters.This is why cycles matter. When financing costs come down and supply is constrained, prices don’t grind higher—they launch. This Is Exactly What the Bottom Feels Like Bottoms never feel like bottoms. They feel confusing. Uneasy. Contradictory. And that is precisely why it’s the opportunity. Every big wealth-building moment looks like this in real time. Everyone’s distracted by what’s hot while the discount sits in plain sight. Make no mistake—if the Fed keeps cutting and liquidity continues loosening, apartments aren’t going to stay discounted. They’ll do what they did after 2009. They’ll do what oil did after 2020. They’ll do what tech did after the dot-com crash. They’ll reprice fast. And years from now, people will look back at this exact moment and say the thing they always say after missing the obvious: “It was right there. Why didn’t I buy more?” Well… it is right here. Apartments are on sale. No one has been beating the drum more on this than my guest on Wealth Formula Podcast this week.
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50:41
535: Apartment Buildings Are Having a Holiday Type Sale
It's that time of the year again—Black Friday, Cyber Monday. Everyone loves a deal. If you've been investing long enough, you know one important fact: there is always something on sale. The problem is the herd never sees it. They're too busy chasing whatever feels safe because it's setting new records. And right now? That's the stock market. That's gold. Everyone's piling into the most expensive things they can find and patting themselves on the back for being "prudent." But smart investors don't chase what's already expensive. They look for the thing sitting quietly on the clearance rack, the thing nobody wants yet. And today, that thing is real estate—particularly apartments. We've seen this movie before. Think back to the early 2000s. After the dot-com crash, everybody ran to gold and Treasuries. Meanwhile, the very companies that would define the next two decades—Amazon, Apple, Microsoft—were sitting there marked down 75%. You didn't need to be a genius to buy them. You just needed the stomach. Then there was 2009–2011. Real estate was radioactive. The media made it sound like apartment buildings were going to fall into sinkholes. But if you bought during that window? Values didn't take ten years to recover. They snapped back within three. And then they kept running for another decade. And remember 2020—oil going negative? That's the kind of insanity that only happens once in a generation. People were literally joking that Exxon would pay you to take barrels off their hands. It was absurd… and it was the greatest energy buying opportunity in modern history. But most people sat on the sidelines in fear. Different cycles, different assets, same principle: If you want outsized returns, you have to be willing to buy what everyone else is mispricing. And right now, the only major asset class not making all-time highs is real estate. In fact, our Investor Club is still finding deals discounted 30–40 percent from just a few years ago. Apartments, specifically, are in this bizarre sweet spot where pricing is still beaten up from the rate shock, yet the fundamentals underneath are quietly strengthening. Sellers who bought with floating debt are fatigued. Buyers with dry powder are getting real discounts. Construction has collapsed—meaning supply will be razor-thin in 18–24 months. And the interest-rate environment is shifting in exactly the direction apartments benefit from. This is why rates matter. This is why liquidity matters. This is why cycles matter. When financing costs come down and supply is constrained, prices don't grind higher—they launch. This Is Exactly What the Bottom Feels Like Bottoms never feel like bottoms. They feel confusing. Uneasy. Contradictory. And that is precisely why it's the opportunity. Every big wealth-building moment looks like this in real time. Everyone's distracted by what's hot while the discount sits in plain sight. Make no mistake—if the Fed keeps cutting and liquidity continues loosening, apartments aren't going to stay discounted. They'll do what they did after 2009. They'll do what oil did after 2020. They'll do what tech did after the dot-com crash. They'll reprice fast. And years from now, people will look back at this exact moment and say the thing they always say after missing the obvious: "It was right there. Why didn't I buy more?" Well… it is right here. Apartments are on sale. No one has been beating the drum more on this than my guest on Wealth Formula Podcast this week.
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48:59