Lately, I have been asked if we are in a real estate bubble. My answer is, "Duh!" In my opinion, this is the biggest real estate bubble I have ever lived through. Next, I am asked, "Will the bubble burst?" Again, my answer is, "Duh!"
It was only a few years ago we were in a real estate depression, which proves how quickly people forget. In 1987, the stock market crashed and the Savings and Loans went out of business. That led to one of the biggest real estate fire sales in history.
By 1991, the real estate market was depressed and it remained depressed until around 1998. In Hawaii, the real estate market remained depressed until 2001. Today, the Hawaii real estate market is on fire and people have already forgotten how bad the market was.
So the answer to the question, "Will the real estate bubble bust?" is an emphatic, "Yes. All bubbles bust." The reason I write this alert is because this time, when the bubble bursts, I think it will be a monster. Never in my life have I seen so much money being made on such weak fundamentals. If you think the last recession caused by the bubble bust was bad, the coming recession will be at least twice as bad. It might lead to a depression.
The reason I put forth this alert is not to frighten anyone. The reason I put forth this alert is to say get prepared for the coming economic changes. Presently, although Kim and I are still buying real estate, we are also selling our "junk" real estate. Eight months ago, Kim put on the market a small apartment house valued at $1 million, for $1.4 million. People complained and no one bought it. So four weeks ago, she raised the price to $2.0 million and it sold in one day for full price. To me, this is more than a bubble… it is a mania.
As many of you know, the best time to get rich is after a crash. My suggestion is: if you are new to real estate investing, this is not the time to jump in. If you are holding "junk" properties that are costing you money, you may want to consider unloading them.
How long will the bubble last and keep expanding? I do not know. I just wanted you to know that I am currently preparing for a crash, an economic recession, and possible global depression. Why? Because this is a very big worldwide bubble…the biggest I have ever seen.
SAVERS ARE LOSERS
Also, I am getting rid of my U.S. dollars. As you may know, the U.S. dollar has lost nearly 40% of its value against other currencies in the last four years. That means if you have $10,000 in savings in the year 2000, it is worth about $6,000 in purchasing power. Rather than holding cash in the bank, Kim and I have been holding our excess cash in gold and silver bars. Why? Because you will know that the dollar is falling because the price of gold and especially silver will begin to rise. When silver goes higher than $8.50 an ounce and gold reaches $500 an ounce, you will know the end is near. When the crash comes, the currency of many countries will go down in purchasing power as the price of these two precious metals rise in value.
A GREAT BOOK
This past weekend, I held a class for about 150 people on the book entitled "The Dollar Crisis," authored by Richard Duncan. If you want to better understand why the real estate bubble bust and the crash of the dollar will probably lead to a prolonged recession, you may want to read this book sooner rather than later. In a nutshell, we really do not have a real estate bubble…the world is in a currency bubble. In other words, the governments of the world have printed too much "funny" money and cash will soon turn to trash.
Even if you are not in real estate or are saving dollars, you may want to read this book to find out what you need to invest in now, before the bubble bursts. If you are in stocks and mutual funds, you definitely want to read this book.
Again, I do not write to frighten anyone. I write primarily to encourage people to prepare for one of the biggest and best opportunities to win financially. My book, Rich Dad Poor Dad, came out in 1997, at the height of the stock market boom. In my book I wrote about my rich dad recommending I learn to invest in real estate. The people that followed my book's advice rather than the advice of their stockbrokers, financial planners, and mutual fund advisors, did very well in real estate. Prior to 2001 and the stock market crash, many financial planners and stockbrokers criticized my book. Today, they are quiet. Today, while I am still in real estate, still buying great properties for cash flow and not flipping them, I am concerned about those who are invested in junk properties or are living in homes that they cannot afford.
If you only have a few dollars, you may want to go to your local coin dealer and buy silver and gold coins as close to the price of gold or silver as possible. I would not invest in "collectible" precious metal coins unless you really know a good collectible coin from a bad one. For as little as $20 you can buy a few precious metal coins and begin to take steps to prepare for one of the biggest crashes in world history.
Thank you for supporting the Rich Dad philosophy. Keep getting educated and always remember that the best time to get rich is right after the bubble busts.
Thank you and all the best.
P.S. There is a saying that goes, "When your picture appears on the cover of Time Magazine, your career is over." If you have access to the June 13, 2005 issue of Time Magazine, you will see a picture of a man hugging his home. The title and subtitle say, "HOME SWEET HOME: Why we're going gaga over real estate."
P.S.S. There is another saying that goes, "As General Motors goes, so does the U.S."
Well, today, both General Motors and Ford have had their corporate bonds down graded to "junk bond" status.
P.S.S. Rich dad would say, "As one party ends, another begins." This real estate bubble has made many people very, very, rich. I hope it has made you rich. It has certainly made Kim and I very, very, rich. But in my opinion, this party is over … so see you at the next party.