Lead Story… For the most part, I try to stick to data and facts and avoid anecdotal evidence when observing the real estate market. However, sometimes a piece of anecdotal evidence comes up that is so compelling that I can’t ignore it. Sometime last week, I was laying in bed doing the same thing that I do every morning when my alarm goes off at 5:15 and I’m trying to avoid getting out of bed to go to the gym: perusing Instagram for immature, degenerate memes. As I was doing so, the following advertisement made it’s way into my feed:
Needless to say, I had to take a screen shot and share it. Apparently, Tony Robbins and Sylvester Stallone are speaking a something called a Real Estate Wealth Expo and marks, I mean attendees are ponying up $250 each to hear them (side note – tickets are $2,495 for something billed as the “Ultimate VIP Experience”). First, a little background for those of you unfamiliar with these two men. Tony Robbins is a motivational speaker best known for infomercials and public speaking appearances. He’s also very tall. Robbins must be good at motivating people since Ray Dalio and Mark Benioff apparently have him on retainer and it appears as if he has made a lot of money over the course of his career. I’m assuming that he is also quite persuasive, as he was also able to convince dozens of poor souls at one of his events last year to walk across hot coals. It ended poorly to say the least. Nothing in Mr. Robbins’ bio mentions real estate. Sylvester Stallone is an American actor and filmmaker best known for his lead roles in both the Rocky and Rambo franchises. Both were great and I believe that Rocky is the greatest motivational series of all time (hey, I’m a child of the 80s). Just like Mr. Robbins, I’m assuming that he is quite wealthy. Also like Mr. Robbins, there is nothing in Mr. Stallone’ s bio mentions real estate.
It’s safe to say that neither of these guys made their substantial fortunes in real estate – sure they may use cash generated elsewhere (ie motivational speaker fees) to buy properties but it doesn’t appear to be any substantial part of their wealth generation – yet they are being passed off as experts to the gullible masses. (Side Note: if you Google Robbins and Real Estate, the first page is filled with links to his Wealth Expo and other speaking engagements. If you perform the same search for Stallone, all that comes up are newspaper listings for his former residences – nearly all of which include terrible movie puns – including one in which he lost a lot of money on a home in La Quinta). What’s worse, is that people are apparently buying in. Let me be extremely clear on something – if you attend an event like this expecting to hear some secret formula about how to get rich investing in real estate, you are a moron. That’s not just me being a keyboard warrior either. If you want to come by Landmark’s office at 1201 Dove Street Suite 500 in Newport Beach, I’ll say it to your face if you’d like. The only people making big money off of this sort of thing are the celebrity endorsers like Robbins and Stallone (I later saw that Pitbull is also speaking at the event) who are selling the snake oil, not the people in attendance paying for it.
So, what does this say about today’s real estate market? In my opinion, nothing good. If a substantial number people really believe that there is a fortune to be made in real estate and that will gain an advantage via a secret motivational formula from celebrities, that’s certainly an indication of overheated sentiment. To be clear, it’s existence alone does not mean that the market is in a bubble or even overheated but it is a warning sign. You know when you never see stuff like this? 2009-2012 when values were still falling and people were afraid that they would never recover. Ironically, that was the time when there were incredible values to be had if one could work up the courage to act and put financing together to capitalize on the carnage and distress. However, you probably didn’t hear from the celebrity hucksters back then since fear of being in outweighed fear of missing out which made it a great time to be an investor but not a great time to sell motivational seminar tickets.
Just like any other asset class, making money in real estate is not glamorous. It takes a lot of hard work, relationship building and analysis. If you’re serious about it, you would be far better off taking a real estate class at a local college than paying for a lame motivational speech. You won’t get the rah rah or the opportunity to grab celebrity autographs but you will learn something. Remember, acting on emotion is a poor way to manage your finances. Ultimately, the people who walked on hot coals at that Tony Robbins event last year only lost a few days to the hospital and a bit of their dignity. However, basing your investment outlook on the advice of celebrities in a hot real estate market could have a much more negative long term impact on your net worth and financial well being.
Crystal Ball: The workforce of 2026 is likely to consist of robot cashiers, well-paid math nerds and a whole lot of healthcare workers. See Also: Meet the robot that will handle your divorce proceeding free of charge.
The Missing Piece? A fairly robust global economy is finally spurring factories to ramp up spending which could lead to rising wages and inflation.
Disruption Coming? How ride hailing services that lead to less cars in garages could spell trouble for the white-hot self storage market.
Making a Move: Amazon’s potential move into the pharmacy business has healthcare companies nervous.
Til Death Do Us Part: Lennar and Cal Atlantic are merging to become the largest home builder in the US.
Breaking Point: Rising rents have resulted in nearly 20% of renters in the US struggling to may their monthly payments.
Location is Everything: America isn’t in a housing bubble nationwide but some cities are in danger of overheating.
Double Edged Sword: AirBnb typically leads to higher rents and less supply. However, it also helps existing home owners make extra income to pay their bills by renting out a room.
Wish That I Had Thought of This: A Carnegie Mellon University professor has discovered a way to allow AI to manage traffic lights, leading to a more efficient system that is already working in Pittsburgh and Atlanta. (h/t Steve Sims)
Oversubscribed: There could be quite a bit of pain on the way for overpriced technology startups thanks to too much money chasing too few deals.
Difference of Opinion: Americans overwhelmingly love weed…..except for politicians.
Chart of the Day
Forever Alone: Someone has invented a headless robotic cat pillow with a wagging tail for lonely cat people who don’t have a cat to hold on their laps.
When Life Hands You Lemons: A 38-year old Wisconsin man got locked in a convenience store’s beer cooler. Rather than bang on the door, he stayed all night and got wasted. (h/t Tom Farrell)
Fake it Till You Make It: Selfie-obsessed Millennials are renting grounded private planes for $240 an hour to make their lives look more glamorous. Consider this a reminder that no one has a lower credit score than the guy flashing hundred dollar bills on Instagram.
It’s Lit: A new U.S. study links marijuana use to more intercourse. First off, the Stanford University School of Medicine really spent money to fund this. Second, how come no one ever asks me to be part of one of these studies?
Landmark Links – A candid look at the economy, real estate, and other things sometimes related.
Visit us at Landmarkcapitaladvisors.com