Today we have a very interesting question that comes from far, far away. Before I get to the question, if you haven’t subscribed, remember to click that subscribe button and do so, regardless of whether you’re on iTunes, pod bean, or anywhere else be a subscriber that way you’d never miss another episode.
So today’s question comes from, and I hope I don’t butcher your name is Mignon Smith. Anyway, she comes from a country far, far away, and she says, hi, Marco and team. I listened to your interview on Wealth Breakthroughs, and I’ll stop right there for those of you who are not familiar with wealth. Breakthroughs is it’s a newly released docu-series that is being played for free right now, one episode per day for a few days, I guess it’s a total of 10 days, but we’re in the middle of it right now.
However, they are going to be doing a full two-day free preview of all the episodes available, I believe at all at one time. So check that out. And the way you can get to that is go to our website at noradarealestate.com and right there on the homepage, scroll down about halfway and you will see a large wide section of the homepage where it says Wealth Breakthroughs, and there’s a link there. If you click on the link, you can subscribe to the free preview. And again, it’s going on for probably another week and it will be available until sometime late the first week of August. So check it out. There are some amazing people in this docu-series including Kim Kiyosaki, Robert Kiyosaki’s wife, Dean Graziosi, and there’s just a whole list of 40 wealth experts on there.
Anyway, I mean, Mignon continues here with, I’m interested in your program, just one little problem. I live in South Africa. I do not have citizenship in the USA, but if at all possible, I would rather invest there than in my own country. We have too much uncertainty and politics and policies with the ANC and land grabs. I owned two communes at the university and the class of tenant really drove me out of that business.
I’m very sorry to hear that.
I now have the capital to invest again, but not really interested in South Africa. Any ideas?
Well, thank you for the question. I appreciate that. And I’m glad you reached out. I’m also happy that you saw me on Wealth Breakthroughs from so far away. So let me touch upon a few points here. I think you’re going to know where I’m going to go with this because it’s that I am biased for the United States or towards the United States.
I’m just looking at data and facts and the availability of opportunity that we have here compared to the other places around the world. So let’s, first of all, start off with political stability. This is clearly the reason you’re reaching out to me in terms of this question of investing in another country. And you’re obviously choosing what you probably put at the top of your list and that’s the United States of America. So when you look at the USA, in terms of political stability, if you were to look at the globaleconomy.com, they actually have an annual ranking. It’s lagging by two years, but there’s other organizations and institutions that will actually rate and rank every single country in the world on different factors. The bottom line is, is that the US is ranked number 69 in that list. Now that may not sound like a lot, but they have a political stability index that goes from 2.5, meaning strong to minus 2.5, meaning weak zero being the middle.
The average for 2018 based on 195 countries was -0.05. So right around zero, the highest value on this list, even though it goes up to 2.5 was Monaco at 1.61. So Yemen was on the far end of that spectrum at minus three points. And I don’t know how you get minus three on a scale that goes to minus 2.5. It must be very bad there. Anyway, Monaco is at the top of the list at 1.61, the top five would be New Zealand and second Singapore third, Liechtenstein fourth, Andorra fifth and Iceland interestingly enough, as number seven, Aruba number eight and Luxembourg number nine Switzerland you’d think would be on the top 10 and it’s pretty close. It’s actually number 11. So these are the countries that have the highest political stability.
The United States on this list is number 69. So we’re really not that high, but all things considered. It is still a pretty strong country. Stability-wise and here’s why I say that there’s really two main reasons. Number one, most people know that the US has something we refer to as the rule of law and very strong rule of law. The country is based on laws. We are built on laws. The rule of law is the restriction of the arbitrary exercise of power by subordinating it to well-defined and established laws. So we base everything we do base on these rules and regulations, essentially what we call laws. And that provides for a lot of stability. Rather it’s in running a business, economics, the economy, civil rights, whatever it may be. We base everything in laws, put it in the books. And we have courts to basically back that up.
The second thing I will say about the US whether this is a good or a bad thing is a matter of debate, and I’m not taking any political side here, but we do have the largest military in the world. The US actually outpaces all nations in military expenditures, which is a massive amount. The world military spending told more than $1.6 trillion in 2015. I know it’s more than that now, but think about that $1.6 trillion and the United States accounted for a whopping 37% of that total, the US military expenditures are roughly the size of the next seven largest military budgets around the world combined. So just think about that. It’s an enormous normous, military-industrial complex, anyway, political stability because of rule of law. And also we have the ability to protect our borders and provide stability, not just for our country, but for ally countries through the military. So if you’re looking for a country that has political stability, you know, you’re clearly looking in the right direction.
Now, what about the economy? We have a massive economy, the US national gross domestic product, or what they refer to as GDP is 21.4, $4 trillion. That’s massive 21, almost $22 trillion. This number is a few years old. So I think we’ve already surpassed the $22 trillion mark, but China comes in second and China is a very, very large economy. As we all know, it’s at $14 trillion, Japan being third is at 5.15 trillion, Germany, which is a powerhouse economy, and they have incredible cars. And engineers, Germany has a nominal GDP of 3.86 trillion, almost $4 trillion. And finally, last but not least, the UK has a nominal GDP of 2.83 almost $3 trillion. So just look at the ranking here, and you look at the size of the US economy. It is massive $22 trillion. So aside from that kind of the more touchy, feely things, just looking at it from the outside in, we have incredible diversity across the board here, culturally, economically, politically, geographically, racially in this country, you can go from the mountains to the ocean, you know, all over the country, even here in California, a two-hour drive separates me from being on the beach, sticking my toe in the water, in the ocean to being in the mountains and in January, February, and being able to ski, although I don’t ski, but if I were to ski, I could literally go to the ocean in the morning and go skiing in the afternoon, incredible diversity across the board.
But really what it comes down to from an investment perspective is we have a tremendous growing population, strong housing markets, peppered around the country, strong housing trends. And if you look at the three main trends that we have going on right now, first and foremost, our mortgage rates, they are incredibly low and they will probably stay low for the foreseeable future. As long as I could probably count years because I don’t see them going up anytime soon. But the reality is that you can get mortgage financing below 5% for 30-year fixed-rate mortgages. That’s assuming you live in the US or a US resident or citizen, but conventional financing on a 30 year fixed, you can get for as low as 5% or less. And we are still near if not at historic lows. And we’re roughly about the lowest it’s been for many, many, many years.
So low-interest rates are an attractive factor or trend right now. The second thing is that home prices are still rising, even though the rising slower than before, they’re still rising. We still have positive trends and markets do need to take a breather. They can’t go up indefinitely forever. There will be years where there’s a pause or a slight pullback. And this is very, very much market-specific, market as in local markets. But the national association of realtors, their chief economist, Lawrence Yun, he believes that home prices will make their way back up to about a 4% growth rate overall this year in 2020. And he’s just looking at all markets combined, there will be markets that will be zero, and there will be markets that are going to hit 6 or 8%. And there will be markets that are depreciating as we are seeing in some markets and hyperlocal markets right now today.
And then the third trend is that millennials are a huge demographic and they are buying homes. They are forming a new trend of home buyers and home renters because millennials are heading out of the home. They’re getting married, they’re having families. They represent 38% of all the sales that happened last year. That’s over a third. That is big. And so these millennials, people who were born between 1980 and 1998, which is about a 20-year span, represent the largest home-buying demographic this country has ever seen. And they are now entering those buying years. The leading edge are already buying homes for their families. And there’s a bunch of them behind that, that are still going to create positive demand on housing for more housing, more rentals, and push demand up. And therefore they will support the housing market, not by themselves, but they are a significant demographic and they will have an impact.
So I can understand why you’re looking at the US for investment reasons. Since you are not a US resident or citizen, I will make one final comment here. There are at times mortgage financing for what we’ve referred to As foreign nationals. You are a foreign national. You might be able to get financing within your country for the purchase of real estate, outside your country. You need to check with local banks on your side, but check with our investment counselors here, just submit an inquiry through the contact form on our website. And one of our investment counselors, we’ll circle back with you. There are times where we have lenders that are what we refer to as portfolio lenders. And they basically work with private money that will finance foreign nationals. They don’t always land that they were lending right before this Coronavirus hit back in February, March, then they all pushed on the brakes and stopped lending. Now, I heard that they are starting to come back. There’s one in particular that I can think of. So it’s just a matter of timing. And if nothing is available for you today, in terms of mortgage financing, then there may be in one or two weeks or one or two months. You just need to kind of wait it out, but it will come back. I don’t see a reason why it wouldn’t come back.
So anyway, I hope that helps. I appreciate the question. Our podcast here is heard in over 100 countries around the world. So I really appreciate the international audience. So once again, Mignon, I believe that’s how you pronounce your name, thank you so much for the question, and for the rest of you listening to download our free report, The Ultimate Guide to Passive Real Estate Investing it’s available on both of our websites, get your free strategy session. If you’re thinking about investing in real estate, and you just need some direction guidance and a little bit of handholding, do you have a question about real estate investing? No problem. Send it over. I will do my best to get to that question. And if you haven’t already remembered to subscribe, thank you for listening. We will see you on our next episode
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