054: This Magic Moment: Creating Generational Wealth Starts Now
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To kick things off today, we’re throwing it back to our childhoods. Do you remember what your favorite toy was growing up?
For us, it was our prized stuffed unicorn 🦄– Star Gazer. She was purple, had a fantastic rainbow horn, and a glittery tail. She was all magic and fantasy and everything that was pure in the world.
Why are we talking about Star Gazer, the fictional unicorn and what does this have to do with investing?
The unicorn we once knew and loved as kids took on a whole new meaning when we became investors. In the world of venture capital, the term “unicorn” is used to describe a start-up company with a value of over one billion dollars.
Now, as adults and active investors apartment syndication biz, we are in a rare moment in time that we need to talk about. We’re talking lightning in a bottle, four-leaf clover, and every 11:11 wish coming true at the same time. How can this be possible and what does it mean for you? Generational wealth.
We don’t know about you, but when we think of “generational wealth” we think of old money. Like New York City Gossip Girl old money. 💰💰
While we may not know how Serena Van Der Woodsen’s great grandparents made their millions or billions, we can learn a thing or two from history as a whole. Funny enough, these old timey people we think about have more in common than you might realize.
When studying the wealthiest families in history, one of the most common denominators in their wealth building is their decision to invest and lean into one asset class. That decision alone catapulted their family’s wealth to astronomical heights.
So who are these families who have their great-great grandkids still eating off a silver spoon? The Vanderbilts, for one, are known for their investment and pioneering steamboats and railways. The Carnegie’s– yes, the one with hall– made their billions in the oil industry.
For us? No shocker here, we’re sticking with multifamily apartments, now, more than ever. 🏨 Before we get too ahead of ourselves, in no way are we saying that apartment investing is the golden ticket to making you the wealthiest person in the world, we wish.
What we will say though is that investing in this asset now can put you ahead exponentially. We are in a unique time in history right that when paired with the right investment, and the right time, you can truly capitalize on.
Picture this, 1⃣0⃣0⃣ years from now when we’re far away from this earth, or under it, your great-grandkids can be on the moon, floating down their luxury biodome where pictures of you are hung and they’ll be thinking to themselves, “Wow, they really helped us get here by creating sustainable wealth.” Talk about leaving a legacy!
While steamboats, railways, and apartment syndication may seem like nothing in common, that couldn’t be further from the truth. There are more similarities than differences. One of those differences? These legacy makers saw what others couldn’t see– demand on the horizon.
People needed to make their way out west from New York. Boom. Railroads. 🛣
A way to transport goods that were efficient and could cross water ways in New York. Boom. Steamboats. 🚢
A housing shortage in the US and the demand for homes to be built. Boom. Apartment Syndication. 🏢
In case you’re missing it, this is our unicorn moment. And by our we mean all of us apartment investors, not just Palm and I. We want to let you in on the action that can drastically change your life, and your future family’s life, for the better.
Let’s start by looking at the housing crisis as it currently stands. According to one study, the US is short approximately 4.4 million houses and the builders can not catch up.
According to the National Multifamily Housing Council (NHMC) the US needs to build an average of 328,000 new apartments every year by 2030 in order to keep up with demand; however, we’ve only been able to hit this mark three times since 1989. Local, State, and Federal regulations, zoning laws, and other high barriers make this goal virtually unattainable.
A classic issue of demand with very little supply. Many people looking at this situation would automatically think, “well, build more single-family homes.” Unfortunately, that solution won’t go far either. New construction of single-family homes cannot be depended upon to solve this issue, as labor shortages, material costs, and zoning restrictions present significant challenges. At the same time…
A growing number of working families are struggling to find housing they can afford. Federal, state, and local governments must reduce barriers to developing more rental housing and leverage the strength of the private sector to both produce new housing and preserve existing apartments. 😕😕
So yeah, a lot of issues are here when it comes to housing and how families can afford to live in them. Historically, apartments have been the ideal solution to these problems. They have both provided affordable and flexible housing options, and many of them, literally, are right on top of one another. Providing multiple home solutions in one location. ☺️☺️
Seems like a no-brainer, right? Many people are trying to get in on that renting game. Super expensive homes, not a lot of options, looking for affordable options seems to be the only solution. Or, is it?
As the number of renters reaches historic heights, the surge in demand has left a lot of pressure on the apartment supply chain. This has made it difficult for millions of families across the income spectrum nationwide to find affordable rental housing. Apartment owners and companies simply can not build or refurbish fast enough.
What was once a convenient and affordable opinion, has become a nightmare many were not anticipating. And COVID-19 was not helping the cause at all. The record-setting double-digit pace of home price appreciation and rent growth during the pandemic suggests that housing demand has now outpaced supply by a significant margin.
This seems to be a race that no one can win– and the experts seem to agree. Even though there have been massive strides through new construction that have closed some of the gaps between supply and demand last year, and will hopefully continue through this year, experts and analysts seem to agree on one thing, “it will only be a drop in the bucket”
The way we, the Kitti Sisters, see it? This is not a one-size-fits-all solution. The path to closing the gap in housing supply is likely to be a cocktail of new multifamily construction, aka apartments, value-add renovations of existing multifamily real estate, and the conversion of existing buildings to multifamily apartment units.
Okay, so by now you’re starting to see the fuller picture of the housing shortage crisis in the US. For some of you, maybe this conversation is personal. Perhaps you know someone– your own son or daughter– or another family member who is struggling to find affordable rent. Perhaps you yourself are wondering if you’ll ever stop renting and start to own something. Ya know, like the folklore tales our parents and grandparents used to tell us. 😜😜
Well, any good fantasy tale has a unicorn involved, so hold on tight to this one and let’s discuss why taking action is key to capitalizing on this unicorn moment we’re living in.
Ride the Unicorn Wave
As we mentioned earlier, there is a universal law of supply and demand. The law of supply says diminished supplies cause buyers to pay more for the same good or service. Ever wonder why people go crazy for those limited edition sneakers that drop at midnight? Rare in supply, yet fundamental in human nature. We often want what we can’t have.
Or at least, what’s hard to get. Limited edition sneaks are not the same thing as secure and safe housing. If we were to take a stab at looking into the future, 20 years from now we see the US will increasingly become a nation of renters with even worse supply-side constraints.
Just when you thought it couldn’t get any worse, if history has taught us anything, it’s that it absolutely can. This is why you need to be on the right side of these hold-ups. Those who are able to control the supply slide come out winning big. 🙏🙏
Like, potential Vanderbilt money big. Here’s the kicker, it’s all about the timing, which is why it’s critical to invest in as many multifamily apartments today, as the price will only continue to climb over the next few decades.
And if you’re like us, who don’t have millions of dollars sitting around, owning a piece of a pie through apartment syndication is not a bad strategy right?
Have doubts? Think about when you were growing up. If you lived in a single-family home, do you know how much your parents paid for them? If you were lucky enough to grow up in a picturesque beach town like Malibu in Los Angeles, your parents could have purchased a home in the year 1969 for the cool price of $80,000.
Today the average cost of a home in Malibu is over 4 million dollars. In fact, in the 1970s, the median home price in Los Angles County was $45,000. In 2021 that soared to $826,500.
You might be thinking, “okay, well that’s Los Angeles, you can’t buy a bottle of water at the grocery store for less than $10.” True, so let’s go somewhere off the beaten path. Like the quaint and kind Midwest, to Fort Wayne Indiana. In Fort Wayne, the home appreciation has gone up 72.3% in the last 10 years bringing the average cost of a home to be $172,600.
Do you see where we’re going with this? The investment game is really simple. Especially when you’re investing in a great asset, like a Class A property in a booming location that is able to weather any cycle of the market. Compounding is the name of the game because it will help grow an investor’s wealth via multifamily apartment syndication with potentially zero tax on capital gains.
And for those who wonder what the Kitti Sisters preferred markets, be sure to go to our show notes, and download The Top 5 Little Known Market to Invest In Now.
Recently we had someone who invests with us say we were one of the best things to ever happen to his retirement plan. After he did his own calculations from passively investing with us, he will end up with $10 million dollars within the next 10 years. 😍😍
This is one man’s story, and while no two stories are the same depending on financial situations or where people are at with their retirement accounts, what we’re trying to highlight here is how quickly your wealth can grow.
This is why we remain hyper-focused on multifamily apartment syndication because we see the long-term trend and understand this asset class will remain a very strong and vital part of the US economy. 🤩🤩
Before we let you loose on your investing journey, let’s set some ground rules to make sure you maximize your gain and minimize your downside risks. This is not the time to invest in just any deal but the right deal.
Ground Rules
First and foremost, you need to establish your internal investment criteria and set clear goals that you are looking to hit. It all goes back to prioritizing and not being overwhelmed by all the options out there. For more on this, check out episodes EP005 The Quickstart Guide to Apartment Investing & Apartment Syndication, and EP017 the 9 Numbers You Need to Know. Don’t worry, we’ll link these podcasts in the show notes.
Next up, you must invest with those you know, like, and trust. In this apartment syndication business, it all goes back to relationships– if you wouldn’t have a glass of wine with them, why on earth would you give them your $50k to invest?
This business hinders on strong ties, unlike investing with mutual funds or stocks where you have very little interaction with these fund managers. We can’t stress this enough, it’s imperative that you get to know and vet them out to make sure their investment criteria are a good match for yours. To learn more about how we only work with the best, listen to episode EP007 The Exact Strategy We use When Vetting an Apartment Investment Deal.
The last ground rule before taking the deep dive to invest– you have to understand the market cycle and learn how to navigate it successfully. Like any relationship, there are ups and downs, and our relationship with the market is very much the same. 🧐🧐
We’re definitely not relationship experts buuut we have a soft spot for the economy. Learn more on episodes EP041 Beat the Recession: How to THRIVE in Uncertainty and EP042 Protect Your Peace with a Solid Retirement Plan.
How are you feeling? Are you ready, motivated, or a little uncertain about where to start? If you haven’t listened to the episodes we listed, start there.
Next up is finding your people, which we have built-in oh-so-conveniently for you through the Kitti Freedom Club, a passive investors club for everyday people like you.
🙌🙌
The main thing we want you to hear is this: you can freaking do this. If you know our story, two girls who grew up in an overworked immigrant household who went from manufacturing to investing in real estate, you can take this on too.
The timing of this opportunity is now, so if there’s a part of you that has made timing an excuse as to why you haven’t invested, we can’t be more clear: it’s go time. It’s not the timing we’re worried about, it’s making sure you’re getting in on a piece of the action so you can secure your future peace of mind for retirement, family, and building the lifestyle you deserve. ✨✨
GET ME ON THE KITTI FREEDOM CLUB
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