Should You Buy Real Estate in 2019?


Should you invest in
real estate this year? That’s a great question. A lot of people have a lot of
different opinions about it. That’s today’s show. Let’s dive into it. Hey, everyone. I’m Clayton Morris, long-time
real estate investor. I’ve done thousands of deals. And back in 2017, I left my day
job thanks to passive income. I had been buying single-family
homes for many, many years. And it enabled me the passive
income to leave my day job. My day job was in television. So I had a pretty
good six-figure job but decided to leave
because the passive income from real estate. So that’s what this
channel is all about– is helping you build financial
intelligence and helping you quit the rat race
if you want to. You don’t have to. But a lot of people do it
through real estate investing. That’s the way
that I’ve done it. And I hope to be able to
help you do that as well. A lot of questions given what’s
happening in the marketplace right now– is the market
going up or down, down or up? Are interest rates going up? Is that going to
keep me from buying? So should you buy real estate
in the year 2019, 2020? Well, a lot can happen
between now and then. But I will point to a brand-new
study that just came out from Deloitte, which interviewed
500 big commercial investors. These are people who are
buying up apartment buildings, buying big
warehouses, and buying lots of single-family
home structures as well because they’re buying
multiples of these in one area. And the survey turned up really
something pretty fascinating. And I want you to really,
really unpack this, if you will, because I think there’s a lot
of ignorance in the marketplace right now as to what is
happening in the investing real estate space. There’s a lot of different
areas you can invest. You could invest in
new construction. You could buy REITs,
which are R-E-I-Ts, Real Estate Investment Trusts. So you can actually buy into
a stock that has real estate. That’s something I
avoid like the plague. You could invest in
single-family homes, which is what I do. You could buy into big
apartment syndications. You could do all sorts of
things in real estate investing. But what they zeroed
in on this study had to do with, to me, the
difference between buying a tangible asset and an
intangible asset like a REIT. So these commercial investors
were asked this question. Do you plan to increase
your portfolio in 2019? Do you plan to buy more
real estate next year and in the year after that? And guess what? 97% of them came
back and said yes. They plan to increase their
portfolio over the next 18 months. That’s pretty remarkable. But interestingly, they
said that if they had REITs or they were invested in
REITs, they’re scared. And they are ready
to run for the hills. Run to the exits, in
fact, was a couple of their words
out of this study. Why? Fears over a trade war
with China, other things that make REITs– which are already to
me a bit intangible, meaning that you don’t have
direct access to the asset you’re purchasing. You’re buying into a fund
which may have access and may be buying
into real estate. So when you invest
in real estate, you actually own a
piece of property. When you invest
in a REIT, you’re buying into a stock which has
real estate maybe in the stock. And they can sell out
pieces of that stock and put things
into that portfolio and move it out, move it
in, move it out, move it in. And so you’re buying into that. As the great Tom Wheelwright,
one of the smartest tax accountants in the
country, says why would you buy a REIT when you could
buy actual real estate? You’re three steps
removed from the asset when you buy into a REIT. When you buy that
single-family home, you own that performing asset. You have the deed
to that property. When you own a REIT,
you buy into a REIT, it can go down to $0 in value. And you have nothing. You have nothing to show for it. So buying into a single-family
home– way, way better. So 97% of these
commercial investors said they were going to
increase their position in real estate over the
next year to two years, over the next 18 months. That’s remarkable. Why? Why did they say this? Let’s dive into this
study a little bit. They said– and
I’m quoting now– “because prices are rising
along with NOI growth.” They say the real estate cycle
still has more room for growth. And the pricing is attractive. And the risk of
inflation is rising. Why is that important? Because real estate
is often seen as a hedge against inflation. Let’s put it in
layman’s terms, OK? Because I’m not that bright. And I like to think of things
in terms of a fifth-grade level when it comes to
some of this stuff. And I’m not talking
down to anyone. I’m talking down to
myself more than anything. But if you have a dollar and
you hold it for 20 years, because of inflation, that
dollar is not worth a dollar anymore. That dollar is going to be worth
a lot less 20 years from now. But owning real estate
often increases in value anywhere between 3%, 5%– you go into some of
those bubble markets perhaps in San Francisco– 8%. So the value of
real estate rises– in fact, outpaces often– inflation. Therefore, it’s seen as a
hedge against inflation. So you’re putting
money into a performing asset that’s also pushing
off monthly cash flow to you. So go back to their quote. Prices are rising along with NOI
growth, Net Operating Income. And the real estate cycle
has more room for growth. The pricing is attractive. And the risk of
inflation is rising– again, a hedge against that. So amazingly, these
REITs, which have seen this rocky
road– a lot of them really took a big hit
late in this year, late in the fall of 2018. And again, a lot of these
investors saying they are running out of REITs
and into real assets. So should you buy
real estate in 2019? That’s up to you. We’re talking about
investment property here. I’m not talking about
the home you live in. So if you’re thinking about
buying a house to live in, that’s not what
this video is about. This video is about buying
rental investing properties that are going to produce
monthly cash flow for you, which is what I do. So to me, those fundamentals
haven’t changed. In fact, they’ve gotten better. We are becoming a
nation of renters. If you don’t believe
me, check out my video where we talk about
we’re becoming a rental nation. More demand for rentals
than ever before. And if you’re buying smart,
you’re buying below market. You’re buying where you can
get a high return on investment with steady, steady
employment in these areas with good schools, which
is what I like to buy. Then you are making
a smart investment. So you’ve got a high
return on investment. You’ve got a stable performing
asset that can never go down to $0 in value. Unlike your fiat
currency dollar that you may have in your pocket or
unlike your stocks that you may have invested in,
real estate can never go down to $0 in value even
if the house burns down. You still own the
land underneath it. And I hope you had
insurance on the property because then you’ll get
the property rebuilt at a replacement cost
for having your insurance on that property. So that is the beauty
of rental real estate. So should you buy rental real
estate in 2019 and beyond? Totally up to you. I know I will be doing that. Should you buy a primary
residence to live in? That’s a totally
different discussion, not what we talk about
here on the show. You know my thoughts about
the home you live in. It is not a performing asset. A performing asset is something
that puts monthly cash flow in your pocket. A home you live in does not,
takes money out of your pocket every month. So totally different discussion,
a thought for another day. So do you plan to buy
real estate in 2019? If you’re ready to
take the plunge, let me know in the
comments below. I would love to hear
your thoughts about what your plans are, what
you’re nervous about, and where you are going
with your rental portfolio. Thanks so much for
subscribing, everyone. We’ll see you back here next
time with another episode. Until then, go out there. Take action. Become a real estate investor. I believe it’s the number-one
way to build passive income and build wealth. We’ll see you next time.

63 thoughts on “Should You Buy Real Estate in 2019?

  • Currently selling my house. Getting ready to purchase buy and hold properties. Also looking forward to purchasing properties with Morris invest this year

  • I plan on investing. Just finalized three refinances yesterday. Going to use that equity to add to my 27 unit portfolio

  • Rising interest rates.rising dollar. Commodities well off there high,It’s been hot for a while…tread lightly. Just saying

  • I've been trying to buy another commercial income property for 6 months here in Texas…. Buying is easy…. Getting a RETURN isn't.

  • Very keen to get started but as a non-US citizen (Australian), I'm a little nervous about the refinancing stage (i.e property number two and beyond) of the journey.

  • Hi Clayton, you make a good point about real estate accruing in value by 3-5% annually, but this is not necessarily the case in all markets.

    Take, for example, the whole of the Illinois real estate market. Home values, particularly low value rental homes, are decreasing in value due in large part to high property tax. It is not unusual for a homeowner to pay as high as 4 or 5 percent of assessed home value each year in property tax, and that amount will likely be increased due to the Illinois state pension crises, among other government fiscal issues.

    For comparison, my home state of Indiana caps personal property tax @1%. If the entire value of the home is taxed away in two decades, the home becomes a rental from the state government, in addition to the mortgage payment and home insurance.

  • Yep👍 it’s a good year to get passive income flowing. I need 20 more hours a week on lake Fork. These 12 hour shifts aren’t doing it for me 😂

  • Thanks for being my mentor. I bought my first rental last year because of you! One day I’ll be meeting you Mr. Morris. I will be buying another house in 2019

  • I’m adding 2 more units in the Nashville market. It’s an increasingly diversified local economy. Healthcare, tourism, tech, higher education and government jobs abound

  • I am planning on holding off investing this year and getting into investing in 2020. I have 30K in debt that I want to pay off or at least down and refinance part of it and get my credit up to the 740+ range. Learning as much as possible until then though!

  • I am scared of getting broke and becoming indebted. I believe in owning rental property (I don't own one yet) is a good business but I tend to play safe. I would rather buy something for less than $30000 which does not require too much repairs and renting one. Unfortunately, I slept through that time when you could buy a $10,000 house in Detroit. My fear is that you buy a property and get stuck with it. I also prefer to buy something on cash than borrowing money from credit cards etc. The prices are going down and will go down more which is a good thing but a bubble bust is not. That upcoming bubble bust is scaring me when there will be no jobs, no money to pay rent etc. So then how can your rental property benefit you? Evictions might become more difficult in times of crisis.

  • There are two conflicting analysis, I have come across: one says the real estate market will pick back up in 2020 and the other says that we will experience a bust which will last for few years. So Morris, if you can tell us which one is correct, that will be nice. Also tell us what should be the strategy in both these scenarios.

  • Question Clayton … How many mortgages can an LLC have? I was thinking about getting one of your turnkey products … when it is up and running and has a tenant and is performing … would like to cash out refi or traditional mortgage it … then buy a second property. Then rinse and repeat …

  • Hey Clayton I want to buy another home (I own currently) and I have a nice chunk of equity in my current home. I cant seem to borrow from some lenders (Their criteria is just too much for me). Can I use my equity to buy real estate? Maybe a HELOC or something!! Thanks

  • I am just 19, want to get into real estate but since my credit was just made not long ago, I have to wait until the end of the year to qualify for a mortgage.

  • I wouldnt dismiss reits that easily. Some people may not have time to invest directly or have the necessary capital. With reits a couple clicks on the computer can get you in the game also you can start with less than $100. Yes you may forfeit larger returns but for some dealing with acquisition/managing a physical property may be more risk due to time constraints or lack of experience. Also reits like STOR and O have 95%+ occupancy. (I know a couple weeks ago you had quite a few vacancy’s to deal with). So id say it depends on a persons situation. Like any investment due diligence is a must. Btw im not a financial advisor, this is only my opinion. Keep the content rolling! Knowledge is power!

  • This is all fine but I think people, like me, are waiting for things to take their course to capitalize on it!

    Thing is that we don’t really know if it will turn around!

  • I'm planning on it, and I'm determined. Just trying to figure out if I should open a heloc or just cash-out refi my home to get the capital for a rental using the brrrr strategy. I'm looking in Jacksonville right now. Crime is high and schools aren't rated highly, but there's good job sources and universities there.

  • I'm about to purchase a home and rent my current home. The problem is, the rental income is less the mortgage. I can afford the difference, no problem. But should I keep the house, or sell it? I want to own a multifamily someday.

  • It's called herd mentality and now is a sellers market. I am waiting for the market to crash once again. Thank you for the info

  • Are investors buying from Morris Invest or from a third party? I came across numerous negative reviews online about your company, where people were completely shocked to learn that the properties were located in war zones and renovation work took many months to get started.

  • Im a meetkevin follower. About to close on my 3rd property, which i consider an investment, bc in the next 5-7 it will be a rental. 🙂

  • Clayton, what are your thoughts on the culture shifting towards socialism? Would that bring national rent controls, profit limits, increased taxes on landlords, elimination of depreciation? Do you know what the it's like for landlords in current socialistic countries?

  • I needed this video! I'm looking at purchasing an out of state 4-plex that will immediately have cash flow. My family is having a hard time understanding and looking at this purchase in a logical light and can only see the bad. Still incredibly excited though!!

  • Rookie investor here, but I thought REITs were a good option when physical real estate in your area was overvalued. I live in Dallas Ft Worth area and would love to buy rental property but prices are too high to make a decent profit. Am I wrong? Thanks

  • I’m in the military and I own two homes, one bought strictly as an investment and one bought as a residence. Now I am thinking about buying an investment property in San Antonio as a rental, but with the idea of moving into it one day. Do you think this is a good idea and what should I look for in an investment/possible future home in the San Antonio, TX area?

  • Right now house and real estate is over price is stupid to buy now lol. If there's a deal you probably steal that deals lol. At least reit give you a dividend. Not all reit goes bankrupt . Stock and house price and reit are the same. They go up and down

  • If the Real estate cycle holds true it’s going down! I’m selling. Corporate debt loans are coming due. Lay offs to follow. The Bubble is huge now. If it wasn’t for QE and the Fed buying up all the properties the market wouldn’t of gone up. What are they going to do next time?

  • Love your content, really learning a lot. Looking to begin investing but at the moment I only have a 30k HELOC. Is it even possible to start with that, if there's low to no rehab?

  • Hi, I need to setup LLC but live in CA. I current have a CA LLC but not sure if I should get rid of it and only pay for the nasty $800 to CA state and form a new LLC in WY. Can you please recommend a lawyer to setup my LLC. I want to be ready before your call.

  • I think for individuals who are looking to hold rental properties for a longer extended period of time, they shouldn't worry too much about where the economy is too much at the moment, because they are in it for the long term. If the numbers, the numbers work. However it is a good idea to make sure you have a little bit of wiggle room with income so that if the economy does take a downturn you can still make a profit. However, house flippers should pay a little more attention to the economy and if the believe the economy is about to head to a recession they should have multiple solid exit strategies.

  • I'm jumping but not over paying always checking my return and watching my numbers i probably will buy something this year since I'm going to sell in probably 10 years. Hoping to find a good deal out there

  • You seen like you know your stuff and I’m looking to make my first Realestate investment. First time buyer may I add. I’ll let you know when my credit gets higher. Paying my cards off at the moment. But it’s my dream to own plenty but my first one should be interesting.

  • Hi Clayton,

    If I were to purchase multiple turnkey properties cash from you and your team, would they be sold to me below the amount of which they would most likely be appraised for prior to me refinancing?

    Thanks ahead of time

  • Now, is not good time to buy , all the time high!!! Keep money or buy gold, silver and when time comes than buy. Remember not now. Recession coming soon.

  • I live in New Hampshire with the motto Live Free Or Die . Well we have no sales tax , no income tax ,just gas ,cigs.,r&m . The entire tax base is on the owners of Real Estate . A normal tax bill up here on a 150,000 house is 6,000 ++ so if you have a single family you rent you get killed . Even a three or four family will not pay for itself . I'm a general Contractor and buy homes and fix them up and sell them , if I can not buy it and get out of it in less than 6 months and that's a long time for me , I just pass them by it's not worth it . If anyone has a better idea please let me know ,

  • Real Estate is only a hedge in inflation and eventual economic down turns IF you own the property outright. If however you have a mortgage and have not paid the property off in full, it is not a hedge for you but a liability. The more inflation, the more chance for defaults on loans. Right now, just as back a few years , Real Estate is a huge bubble and when it bursts there will be no bailouts this time…millions of Americans will suddenly find themselves destitute, and bankrupt. Don't kidd yourselves people..unless you can acquire that property outright and pay it in full…don't buy it, because your are just buying debt.

  • Don't step into the snare of buying real estate now…it's a debt trap and unless you can pay for the property outright, you will lose your property and go bankrupt when the whole bubble bursts!

  • I have considered this but know that there is no way I could possibly afford to buy another house than the one I am living in.

  • Thank you for this video. I have an appointment with your team on Friday 08-02-2019 to discuss Turn-Key Program. Once again Thank you.

  • I purchased a property this year and looking to buy another one. What markets do you suggest are good markets to buy going into 2020?

  • where do you buy your real estates? you said you spend around 30-50k . where do you find these real estate?

  • I'm starting to buy rental properties in 2019! Really excited and ready for financial freedom! Thank you for all your videos. Very inspiring and lots of info.

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