Using Inflation History To Spot The Next Real Estate Window

When markets feel the loudest, the best signals are often the quietest and they’re usually buried in history. We pull a December 2020 webinar back off the shelf and treat it like a time capsule: what we thought inflation, real estate, and the broader economy would do coming out of the pandemic, and what those same data points can still teach us as we head into 2025.

I walk through the core idea that has guided my investing through multiple cycles: chaos creates opportunity. That is not motivational talk. It’s a practical framework for staying calm while other people panic, then using fundamentals to find the “loophole” inside the chaos. We dig into why I focus on cash flow and cash-on-cash return instead of trying to predict appreciation, and how a downturn can actually improve returns when rents hold steady and assets get cheaper.

From there we zoom out to inflation indicators you can measure. We compare long-term moves in gold prices and average home prices, then zero in on the late 1970s inflation spike to understand what rapid inflation looks like in real time. We also connect high interest rates to the rise of owner financing, and why leverage terms and structure can matter more than the headline purchase price.

If you care about real estate investing, inflation hedges, precious metals, and making smart moves around big catalysts like elections, this one gives you a clear lens for thinking ahead. Subscribe, share this with an investor friend, and leave a review so more people can find the show.

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Transcript

Why Replay A 2020 Webinar

Upcoming Election Special Preview

SPEAKER_02 1:04

Episode four. Thank you so much for joining us today, guys. I hope you're having a truly blessed Sunday as I record this. And thank you guys for the support. We got a lot of new subscribers, a lot of new listeners on all of these. If you are joining us on YouTube, which not many people have so far, please subscribe to the channel, give us your feedback there. That's the easiest way to get a hold of us and let us know that you like what we're doing. Shout out to Player FM, which I honestly had never heard of for podcasts until we launched this, but we've gotten a couple thousand new downloads on there and almost a thousand followers. So that's a pretty cool platform that I was not aware of. Apparently it's the number one podcast app for Android users, so that's awesome. Really appreciate you guys there. And if you're listening on Apple or Spotify, please subscribe to the show. Give us the five-star rating if you can. It keeps it going and lets us know that we're adding some value to you. So we're going to do something pretty similar to what we did last week, guys. I'm going to play a video for you. It's actually a webinar that I did that you've heard me reference a lot in the first handful episodes of this podcast. Back in December of 2020, we did our market projections for that coming year, not only for 2021, but looking at what we projected to see in the housing market, gold prices, precious metals, rapid inflation. We kind of talked about, even the stock market a little bit, we talked about some of the strategies at that time that we had used during the early stages of the pandemic and how we thought that was going to materialize itself as we went into the next four years. And so I'm playing that partially because it's really cool to look back. It's almost kind of like a time capsule, not only for the financial markets, but also for the pandemic itself. You'll hear me even call it the Corona pandemic back then, which nobody uses that word anymore. Now it's, you know, whatever it is. But it's also really helpful as we are approaching the election here two weeks from now, as we're getting to the close of 2024 and the beginning of 2025, we can learn a lot about what's coming in the financial markets by looking back at what's happened. And you'll see that's kind of the theme of that webinar that I'm going to play for you today. I think there's a lot of incredible historical data and information that if you're an inflation nerd like me, you can benefit from. And we can use that same data that we use to honestly pretty accurately project what we were going to see over the last four years. We can use that same data to project what we're going to be looking at moving forward. And after the election, I'm going to do a similar review to where we're going to look at what we see for 2025 and 25 to 29, which I'm going to wait because it is, you know, going to have a little impact, at least depending on what the outcome of that election is. On that note, you guys, if you're interested in all this stuff, you like the content we're putting out, you're really going to want to be subscribed because we are going to be doing a huge election special, two episodes from now. So the Monday before the presidential election, we're going to have experts on and in precious metals. We're going to have me on the real estate side of things. We're going to try to get some stock market guys on, which I hate the stock market, but it is important because I know a lot of us are invested in that one way or another, whether we know it or not, because if you've got an IRA that is managed for you that you don't really think about too much, like tens of millions of Americans do, then that is deeply invested into the fundamentals of the stock market and mutual funds, so on and so forth. So we want to look at it not from a political perspective, but from the investor's perspective, what's more likely to happen if Trump wins, what's more likely to happen if Harris wins. And then we can once again to the theme of this podcast and the theme of all the webinars I've done in the last 10 to 15 years, we can try to use all the data we can get our hands on to be as engaged and as protected as possible. So thank you guys again. In a moment, you're gonna hear me, and and again, I'm gonna I'm gonna take one more time just so it's not confusing. You're gonna hear a lot of me talking about 2020-2021 because this is a webinar that was recorded in December, I believe December 11th of 2020. And and just use your own common sense to be able to apply some of the fundamentals that we talk about from back then to what's going on now and look back at that content. Honestly, for me personally, and maybe I'm in the minority here, but as somebody that loves investing, loves these types of data points. This is the best webinar. The webinar I'm about to play for you is the best one that I've ever been a part of to where it's really useful. To me, it's timeless, and we can apply it right here, right now. So thank you guys so much. We'll be back with you in a moment, and I'll close it out at the end of the show as well and tell you a little bit more about the special election coverage that we're going to be doing two weeks from today. Thanks so much.

Why Cash Flow Beats Appreciation

Gold And Housing As Inflation Signals

Owner Financing Born From High Rates

SPEAKER_01 6:17

All right, guys, thank you so much and welcome and happy holidays, Merry Christmas, and hopefully a happy and prosperous 2021 for you here. Uh, this is Stefan Fiscano with the Real Estate Networking Group and Vacation Wealth Partners. And I wanted to take a moment just because we've all been through so much here in 2020. And honestly, for a lot of us, if you're a small business owner, if you're a high-level employee, or really if you're anyone in the marketplace in any capacity, if you have been fortunate enough to make it through the chaos this year, you're probably really depending on a recovery in 2021. And so I think now is a time, maybe more so than ever before in at least recent history, when we're all looking for guidance, we're all looking for information, we're all looking for strategies. Because, you know, for most of us out there, unless you're the Jeff Bezos of the world or Tesla guy or one of these other stock market billionaires in the tech sector that increased their net worth the last year, you're probably someone who has been in some way impacted by the economic fallout of the corona pandemic. And you're probably in a spot where the choices you make moving forward need to be spot on. And I want everybody who's on this call, everybody that listens to the information we provide here, to hopefully come away not only with an extra sense of security and comfort, but more importantly, I want you to be excited about the opportunities that we have. And I'll talk to you in a little bit about my background and what qualifies me to give a prediction on the market and where I believe personally things are going to go. But uh one fundamental thing you'll probably hear me say a lot today, and if you've been on some of my other webinars, you've heard me say it hundreds, maybe thousands of times, is chaos does create opportunity. That's something throughout my life, throughout my career, has proven to be true again and again and again. And the two fundamental principles I always live by, which I didn't know this when I started saying this, but over the years through research, I found out it's also Warren Buffett's key philosophy is it's never as bad as it is when everybody thinks it's bad, and it's never as good as it is when everyone thinks it's good. You know, quick brief example on that with the stock market, and and I despise the stock market. To me, it's a casino. I I think you're you're better off for the most part going and putting your savings on black on the roulette table than investing heavily in the stock market. But having said that, I love an opportunity, I I love a buy, and that's what's always had me be so passionate and thankfully pretty successful on the real estate side. So when the market first crashed back in March of this year, when the pandemic first hit, I didn't even have a TD Ameritrade account. I called my brother up, who's a CPA and he's big into traditional IRA investments and fun things like that. And I said, You got to help me, which is funny because you know I uh I'm kind of known as a guru or an investment expert in the real estate sector, but I was so out of touch with the stock market, I said, You got to help me get a TD Ameritrade account. And uh bought the airline stocks extremely heavily, several other stocks in the hotel sector, MGM casinos, DraftKings, every stock that I bought, I bought without doing it from a fundamental research standpoint, but just off that core philosophy that when the world is panicking and running one direction, if you run the opposite, more often than not, you're gonna be successful. And for a guy that hates the stock market, I can tell you my portfolio there on that TD Ameritrade account is up 340% at the time that I write this, and which now that the stock market's going back up and everybody's jumping in, that's the time when I'm gonna cash it out again and go buy more real estate. So, again, what we're gonna do today, I'm gonna give you my outlook on some interesting statistics that I see coming our way in the real estate sector specifically. I'm gonna mention precious metals a little bit, and we're gonna talk about what we can hope to expect for 2021, 2022, and beyond. This is something I've been doing for about 10, 11, 12 years now in one capacity or another. Um, to get back to the original state of what qualifies me to give a prediction, uh honestly, nothing. My if I'm a big believer that we all have our own opinions, and I always say my opinion in a dollar will buy you a cup of coffee. But having said that, we have been one of the most active players in the space since the last crash in 2008-2009. Um, I've been fortunate, blessed with my partners over that span to acquire more than 600 units. I do believe currently today, we are the largest buyer of owner-financed income-producing properties in the United States, which is a it may or may not be saying much because it's a niche strategy that a lot of people don't even know exists, but it does give us a great sense of things on where things are moving in the market, what types of opportunities are available. And since we also invest heavily in vacation rentals, we really get to see the travel trends, which is a good indicator of economic growth as a whole. So I do think there's some value that we can add. Lastly, and additionally, you can see my beautiful LinkedIn profile here. I am the owner of the largest real estate group on LinkedIn, which is the real estate networking group. All told, my partners and I either own or manage 18 out of the 20 largest real estate groups on LinkedIn, and we've got about 2.2 million combined members and followers there. So that's a big plus, not only for the members, but for me personally as well, because while our mission statement is to create informed, engaged investors and give you access to knowledge and strategies that you wouldn't have seen otherwise, or in some cases hard asset opportunities, it also gives me the opportunity to get a feel for what people are saying on the ground. It lets us somehow get a sense of where things are going before it goes there, which is what I try to pass along to you guys and everybody that listens to these webinars so that you can have that same access that I have and we can all be stronger and more informed and more profitable together. So I'm going to get into some fun stats here. Let me pull up some visuals for you guys. This all started for me, so as I I mentioned to you, I'm always a believer that chaos creates opportunities. So I'm already excited, I'm already seeing this as a buying opportunity. But having said that, you can't just say, oh, well, this is a bunch of crazy stuff. Let me throw some money around and expect to be successful. You have to find the niche, you have to find the loophole within that chaos and within that structure to say, where is it going? Am I going to be able to be prosperous from this? And you guys who know me know I never try to make projections on appreciation. It's not something I do. I don't think maybe that's because I'm kind of a child of the last crash that came up in real estate during that, when I heard so many, you know, supposedly smart people projecting equity appreciations to me, and 100% of them were wrong. So for me, I try to focus on the things that I know are true, which is cash flow. Cash flow, if you base your strategy on creating a high cash on cash return instead of equity appreciation, the nice thing about that is, as you've probably heard me say a lot too, if the market crashes, not only are you covered, but it actually helps you. For example, if I buy a property for a million dollars cash, we'll just use round numbers, and I'm getting a 20% cash on cash return. So the net income I'm generating on that million dollar purchase is$200,000 a year. If the market crashes, and now that same building is worth half of what I paid for it, I'm happy. And the reason I'm happy is because now I can go buy one just like it for$500,000, and now I'm going to get a 40% cash on cash return because as we saw in 2008, 2009, 2010, so on during the last crash, while the values of properties went down 70 to 90 percent, the rental rates largely remained the same, or in some cases they actually went up a tick a little bit there because you had many foreclosed homeowners being influxed into the rental market that used to be homeowners, now they're renters. So having said that, just with that alone, just with the cash flow strategy that we use with vacation loss partners, I'm already excited. But then I started thinking about it, and it all started because someone posted something about the average home price and the average gold price in 1962, looking at inflation rates, and I started thinking there's two things. While I don't like to project appreciation of equity and value, I do like to project inflation rates because that's something that's tangible, it's factual, and it's happened for since the existence of our country. So I started looking at it here, and you can see back in 1962 the price of gold was$35 an ounce at the close. Today it's about$1,800,$1,900 an ounce at the time that I'm making this. Okay, 1980 that jumped up to almost$600 an ounce. So I'm gonna go to the average home price in 1962. Actually, that's not the right one. Here's the one I want. Uh the the average home price in 1960 was eleven thousand nine hundred dollars. That jumped up by nineteen eighty to forty-seven thousand two hundred, up to about 120,000 in the year 2000. And as of 2020, from the statistics that I looked up, it was up to about 148,000 for the average home price in the United States today. So both of these things are obviously both gold, precious metals, and real estate are incredible hedges against inflation. But then what really jumped out at me when I look at these numbers is I said, huh, you know, obviously over the last 50 years, 60 years, these rates of return are massive. But then I looked at what the price was for gold in 1980, and I said, well, 600 to 1800, that's a a 3x return over 40 years for gold. That's actually not that significant. It's really not. But then the reason that I've got this jumped out so much is 1977, look at how much it jumps in this four-year period from 1976 to 1980, from 160 all the way up to 600. So that's about a 450% increase over those four years for gold, which in my opinion is gold in real estate, but slightly edge to gold are the main indicators of true inflation rates. Now I wanted to see if it was the same with the housing market. So when I go to the housing market, you can see a huge jump from 1940 to 1950 percentage-wise. About uh 250%. 1950 to 1960, about 40, 50 percent, still all big gains. But look at the gain from 1970 to 1980. It's almost triple from 17,000 to 47,200. And those of you that that were alive back then already know what I'm about to tell you. Those of you that weren't or or weren't paying attention, what happened from 1976 to 1980 was Jimmy Carter and uh some of the highest interest rates, highest inflation rates that we've ever seen. And I don't know 100%, but I think it was the highest inflation rates, highest interest rates this country's ever seen, which by the way, was part of what gave birth to owner financing as a strategy because people couldn't qualify with the banks with these 16, 18, 20% interest rates. So they say, hey, I mean, I just can't do this, it's gonna be idiotic. Well, you can I buy your property and you carry a note, it may be 10% or 11%, whatever it was, it's still a better deal than these obnoxious interest rates people were paying. Then things started to get back to normal in the 80s, 90s, 2000s, and we actually even saw some deflation happen during those periods. So the reason why this is important to me, the reason why this is such a good indicator, is think about what we've been through and think about with all the negatives that have happened with the pandemic, where's the potential positive there from an investment standpoint? We've printed trillions and trillions of dollars in aid, and we're about to print trillions and trillions of dollars more in aid. Logically speaking, that creates obvious, almost instantaneous inflation. And I'm not saying that we shouldn't be doing that. We need to do that. People need assistance. There's people out there living in cars on the streets, there's small business owners that are going bankrupt, there's restaurants, workers, and owners, entrepreneurs that had their dream. And my gosh, if you started a restaurant in 2019, 2020, I I just I can't imagine. You know, and even us in the vacation rental sector, you know, we had vacation rentals were illegal for three, four months this year, which obviously had a negative impact on us. The only reason that I'm I'm thankful we're blessed to still be here and doing well is because we based our strategy on these fundamental principles and we we put safeguards in place with reserves to protect ourselves. But it's not enough to protect yourself. You know, you don't want to just survive and limp through this thing. You want to actually find the opportunity before anyone else does, and you want to be able to capitalize on it fully. And once I started looking at these numbers, again, already being excited and knowing that there's gonna be some buys out there because of the obvious reasons that you've probably already thought about most of the people on this call. Some sellers are gonna be more nervous than others, some people are gonna be thinking a crash is coming, so on and so forth. You're you're gonna get those buys, and that's fantastic. But this actually genuinely could, when you factor in the combination of fear in the marketplace on the seller side with the amount of trillions and trillions of dollars of paper money that we have printed and will continue to print in upcoming, you know, the upcoming 12 to 24 months to survive this whole thing, you could see the most rapid inflation that this country has seen since 1977, 78, 79, and 80. Right now is the time to buy. You know, if you buy a property today, let's just go back to this average home chart here. If we bought a property and we experienced, and just because I like let's get some factual exact numbers here.

Money Printing And Rapid Inflation Thesis

SPEAKER_00 20:58

If we bought a property for 17,000, okay, okay. I did that backwards, I apologize.

Buying Now And Using Leverage

2008 Crash Lesson And Closing

SPEAKER_01 21:15

I should have probably done that before. Anyhow, um, so that's a 277% return if it mimics the rates from back then. So uh I'm not saying that that's gonna happen exactly, but you get the idea that that's the potential opportunity that lays in front of us. So we're especially if we're already utilizing leverage to create a high cash on cash return. So we don't really care what the property's worth. The property is a vehicle to create income and revenue for us on a monthly and annual basis, right? And it it's it the value then becomes secondary because it only matters what it's worth at the time we buy it and the time we sell it. And if we're earning 15, 20, 30 percent cash on cash returns, why would we want to sell it anyway, right? But even aside from all that, let's say that we buy a property for one million dollars, and then if we get half of this return, half of this appreciation due to inflation that we saw from 1976 to 1980, that's 135% equity appreciation over a four-year period, which is obviously substantial. So now our property that we bought for$1 million is now worth$2.35 million. Plus, just for round numbers and for fun stuff, if we were earning an average 20% cash on cash return, uh let's add that to it and make our overall return on an annualized basis somewhere between 60 and 90 percent, which is obviously insane. I'm not saying that's going to happen. Obviously, nobody knows for sure, but I'm telling you, if you look at all of the math and you look at history, and history usually does repeat itself, the factors line up for this to be, in my opinion, one of the best buying times that we've had. Uh it's certainly since the last crash in 2008, 2009, and you know, potentially since you know 1977, 78. What you don't want to do is wait and be in a situation where you're seeing the margins rise and you try to get in 2022, 2023, and you miss the boat, because at some point, just like how it always goes back up when it comes down, it always goes back down when it comes up to some extent, too. And somebody gets caught holding the bag there, which actually, as many of you might know, you know, happened in the crash in the early 80s there, and then again in the early 2000s, and then again in 2008. So you don't want to be holding the bag there, but if you use fundamental strategies, utilizing leverage, base your strategy on creating a positive cash-on-cash return. I always say the purchase price matters the least to me in any negotiation. It's all about what we can get on an interest rate, interest-only amortization, which again creates higher cash flow, which creates a higher cash-on-cash return, and setting ourselves up to where you genuinely do not care what that property is worth until the time when you go to sell it. And again, why would you sell it if you're earning a 20% return on it? So I will say too, though, if you're utilizing leverage, and if I am correct that we're in a position where we could see rapid inflation here, that also will give you an opportunity to then pull cash flow out because now you're gonna have additional equity and spread that around into more properties, creating more income, which counteracts the inflation, because obviously everything's gonna be more expensive if it goes that way too. So that is something to think about. But in my opinion, and the opinion of those that I respect and trust closest to me, this is one of the best times in our country's history to buy tangible assets. And that's not only real estate, that includes precious metals, gold, things that are gonna hold their value, things that are going to counteract inflation as it continues to rise. So I hope that adds some value at least to someone, or at least makes you think a little bit. Of course, do your own research. Truly thankful to you guys. It's an honor to have you in my network. I'm thankful that you take the time to listen to these webinars. It's our greatest mission to add value to you. And I hope that in some small ways we do that. So again, have a Merry Christmas, happy holidays, and um, you know, may we all have a healthy, prosperous, and safe 2021 together. Take care.

SPEAKER_02 25:26

All right, guys, thank you so much for joining us there. I hope that data was helpful for you. And one thing you heard me mention a little bit on there, and you've heard me mention a lot over the years, if you listen to any of the webinars we've done, is the phrase chaos creates opportunity. And I'll just I'll never forget as a pivotal point in my life when the 2008 crash first started to hit. I had just moved to California. I didn't own a TV, not because I really couldn't afford one or anything. It's just because I, when I first moved to California, my sole focus was work and had a really unique uh job at that point where I was basically on call seven days a week, 24-7. And so I had a radio, and I remember hearing George Bush uh get on and and talking about the bailouts for some of the big firms on Wall Street, and you could just feel it in the air. And I remember talking to a lot of my mentors and people I respected, friends at that time, saying back then in 08 that that was the end, that was gonna be the Great Great Depression. And the Dow went down to, I believe it's off the top of my head, I think it went down to under 6,000 in March of 2009, and people said it would never be above 10 again. Here we are, and it's you know it's been above 40,000 now. And that's both another reminder of inflation over periods of time, and then the huge rebounds we saw in the real estate market and precious metals, what it did during that cycle, what it's doing now, what it did in the late 70s, early 80s. It's just a reminder of chaos creating opportunity if you can be calm in it. And I remember that time so well. I remember standing on the deck of my house in my 20s and hearing all this and thinking, my gosh, I'm so excited. And I could feel it, not because I had the fundamental background that I do now of experience of dealing with market crashes and all the wild stuff we've seen just in the last 15, 20 years, but I could just feel that it's really never as bad as it is when everybody thinks it's bad, and it's never as good as it is when everybody thinks it's good. And if you just go against the grain and keep a calm level of fundamentals in your process and then aggressively pursue that end result, then you can really, really profit from a chaotic market, uh from a downturn in a market can be a good thing for you. And in an upswing, obviously, like I always say too, and everybody, you know, lots of people say, it's not just me, rising tide floats all boats. You can do really well in a good market, too. And uh I just want to be able to be as informed as I can be, and I want to share as much of that with you and the network and you that listen to this podcast as possible. So thank you guys. I really I hope that uh we added some value to you there. Really hope you join us next week. I'm excited we're gonna have our first guests on, and I did mean to say plural on that because we're gonna go from having no guests the first handful of episodes here to having several. We're gonna have experts in as many categories as I can get access to. And again, we're gonna be doing it from the investors' perspective of what do we think is gonna happen with the election after the fact so that we can all be as prepared as we can. So please join us for that one. Thank you guys so much. Have a truly prosperous, healthy, happy week, and we'll see you next Monday.