We have our Macro Q and A here on Tuesday. And I know this is backward right now, but still, it's the thought that counts. This is an article from the market watch and it's "Your house should not be your retirement plan."
Assets versus Liabilities
This article goes on to say - it's really interesting. This is something we've been talking about for years and if you've paid attention to any of the videos we've done over the years, if you paid attention to Robert Kiyosaki, anything like that. We talk a lot about assets and liabilities. An asset is something that puts money in your pocket every month and a liability is something that takes money every month from you. So it takes money from your pocket every month. So knowing that difference is huge and so many of us, I grew up the same way. If somebody just grew up thinking that our house was an asset, our own primary residence, and it's not. It's something that is there to live in and give you shelter, provide for your family, etc. But it's not an, it's not an asset. It's not something that gives you money every single month. Right?
Houses as retirement plans
So in here, they talk about that most Americans, their house is their retirement plan. That's insanity! Most people and I forgot the numbers now, I'm sure many of you have heard them, that 70%, 80%, 90% of Americans don't have more than a thousand dollars in their bank account for an emergency. Or most Americans don't have more than a hundred or $200,000 in their 401k at the end of their life. This, for instance, right here, it goes on to say that a median price home is $240,000 and even if you pay that off, that's going to give you how much to live on. If you're maybe getting some social security every month if that's still there. And if you are planning to just have a little bit social security, if it's there and then your house which is paid off and that you're going to sell that and then you sell it to go live somewhere, right? You knew you sold it off and got all of that money, right? Again, this is backward, but you can get the gist of this, $240,000 home on average or the median-priced home if you will, At $36,000 a year, which is $3,000 a month. Say that's what you want to live on. Even if you want to live on a more, I mean, I'm being somewhat generous here. I think saying you only need $3,000 a month. Hopefully, you want to live off of more. They give you six, not even seven years to live off of your money. So if you plan on retiring at like 95 years old, and maybe that's great. That's awesome. Now you can live the next seven years of your life until you're 102 and you're good to go. So you just work till you're 95 and you're good.
I just wanted to bring this up just briefly because I get this question a lot. I get this question really all time actually. And people are constantly, whenever the market goes up, people are talking about going to invest in real estate. "Brandon, I want to go and invest in properties" and I always tell people straight up, like "This is not a great time to go invest in rental properties. I mean, you can find great deals still at any market. However, it's a hell of a lot harder to find deals in a market when it's this low in inventory, it's a seller's market, right?"
You have to be willing to run into the burning building when the building had a fire. It's a fire sale, right? We all know what a fire sale is. Well, the stock market does the same thing. When the markets are crashing and the real estate market's crashing, that's when you go in and buy stuff. So if for some reason, as I said, the herd wants to go do things when it's the wrong time, always. They're always late to the party. They made their money in 2008-2014, they're gone. That big money has gone. They're off doing the next thing, right? They're the ones buying into gold and silver right now. Stuff like that. You've got China and Russia buying into gold and silver and all the biggest players are hedging themselves. They're getting into the crypto game. All the big players are gone. They're onto the next thing. They made their money in real estate. We had a lot of Chinese investors come in over the last five, six, seven, eight years after the crash, come in and buy a ton of real estate because it was cheap. That's when you make money is when things are cheap.
I just wanted to share because as I said I get this question a lot. What should we do with our money? When it comes into the house game a lot because we talked with a lot of sellers all the time, right? We just listed two homes this week in Clarkston right in our backyard that are people in a great financial situation, but not everyone is. So what can you do to improve your financial situation?
Get to know the process
Well, it starts in getting educated in the process. Start finding better advisers, better mentors around you and start learning the game instead of being just a victim to the game. So, let me know what questions you have about this and just give you the definition of simple things like the definition of an asset and a liability. Everyone was told that your house is an asset. Well, it's someone's assets, the banks' asset because you're paying them every month for it and then you're paying the government property taxes shoot into infinity, right? So you're always paying someone else for the primary residence. If you own apartment complexes, you're getting income every month, you're getting positive cash flow and that's an asset for you. Your primary home is not. So just knowing the definition is really the moral of the story. And once you have the vocabulary correct, then you can have a solid foundation that can be built upon. As I said, I get this question a lot, "Hey Brandon, what should we do? "But remember, most people, they only have their home to a bank on. And again, the entitlements, they're really not going to be there.
Taxes and fees everywhere
Let's be honest. They're not going to be there in 10 years, 20 years, and it's like every single - and it could be to some degree. You're going to get minimal from it and they're going to tax that crap out of every other person possible to even get a little bit of that for those who have paid in the past. So anyone under 40 years old, 45 years old, you should not even be thinking about any of that. You should be thinking about how can I hedge myself? How can I build my wealth now and take control of it instead of just putting it on a 401k that has fees up the Ying Yang? You can't even take it out. It's tax double tech. You have to be able to start thinking differently and these are the things that my team likes. The group, our real estate team, we do this all the time. This is all we do. This is my passion. This real estate team was created because of the issues that were going on 10 years ago. That was through the time, I remember watching the markets go down and just thinking, I need to learn this money game inside-note. And it started literally 10 years ago, over 10 years ago actually. It was almost 11 years ago that I started just devouring every financial book and currency history, of monetary history, real estate and in this and their thing, and getting into this real estate game, actually getting into it and practicing it physically.
It's all a game
That's the way we learn, right? So actually getting into it and doing it. A lot of things became very clear and as you can see, a whole heck of a lot of books that I've read and had the fortune to kind of go through and pour through and start really understanding what the game is about. The median price home, to get a recap, is $240,000 a year. If you're planning on that to be your retirement you have and you're looking at $3,000 a month to live off of, you only have seven years, not even seven years. I'll give you seven years to live off of that income for the rest of your life. Like I said, hopefully, you're 90 years old, 95 years old and you can live till you're 100 or 102 and then you're good to go. Otherwise, if you're planning on retiring when you're 60, 65, 70 or whatever it is, you better start thinking of a different plan. We all better start thinking of a different plan.
I appreciate you guys for tuning in. I appreciate the questions that you guys give all the time. They're always getting more entertaining and fascinating every single time. As I said, I really appreciate it and let me know what questions you have and what you're doing for retirement, what you're doing to set yourself up and to hedge yourself for the things that are coming. Again, we've talked about these things for a couple of years now. We are long overdue for corrections in the market and just been breaking records left and right. And as we all know what good things come in with that. All good things come to an end, what goes up must come down.
We need to be smart about these things. We all do. This has been an 11-year journey. It's never going to end. It never ends. The next market goes down, the stock market goes down, real estate goes down, you jump into that, start buying, right? And then you jump out of the other hedges into that. So it just constantly goes back and forth. It's like a tennis game basically. Right? So anyway, I appreciate you guys more than anything. Your time, your energy watching these videos, it's the most important thing we have, the most important asset we have. So I really appreciate your time and energy more than anything. As I said, let me know what you are doing to set yourself up. I'd be really curious to find out what it is you're doing and maybe we can talk about stuff and maybe learn something from each other. So appreciate you guys. We'll talk to you soon.