Welcome to another episode of Ask Marco and our podcast, the passive real estate investing show. I’m glad to have you here. And this is the first episode that I’m recording here in the new year 2021. Now, if the audio sounds a little odd it’s because I’m recording this on my iPhone in a hotel room in Salt Lake City. And the reason I’m here is because we are doing a live webinar on real estate and investing this afternoon with some colleagues of mine here. And so we wanted to do it live, and this is why I’m out in Salt Lake City. Anyway, I had a number of questions come in over the holidays. So first and foremost, I want to just wish everybody a Merry Christmas, Happy Holidays. And of course, Happy New Year.
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What’s interesting about 2020 is it’s been really difficult for a lot of people, but at the same time, it’s interesting to see how many businesses have done very well. And this is especially true in the online e-commerce space, real estate, especially residential, not so much in commercial, unless you are in storage or warehousing. But if you just do a little research online, you can just see how many businesses have suffered as well as how many businesses have actually done incredibly well. So it’s been an interesting year and I just hope that this year is going to be a better year for those who have had a hard time last year. So I’m going to start off with just a quick testimonial that came in via email here over the Christmas holiday. And it’s from, uh, Tim and Keeley. I believe it is. They just wrote in and said, hi, Marco. I wanted to wish you a Merry Christmas. And I want to thank you for the content you consistently put out on the podcast. You’re very, very welcome investing in real estate through Norada has changed the future of my family.
I am grateful for the amazing team I get to work with to build generational wealth for my family. Keep up the diligent work. God bless Tim and Kelly. Thank you very much. I appreciate you writing in and I’m very happy for you. And the more people that we help, the happier I am, because it’s ultimately my long-term goal and mission to help 1 million people whether directly or indirectly. So at the end of the day, it doesn’t matter if you are doing business with one of our companies, whether Norada real estate investments or Norada real estate funding or Norada capital management, where we have promissory notes, it really doesn’t matter. I just want to put the content out to help people gain financial education so they can get on a path to financial freedom. And that just helps everybody it’s good for the greater good. So looking back at 2020, I’m probably going to record a separate episode on where we’re coming from and where we’re into 2021.
But one interesting little fact or stat is that if you look at core logic’s case shiller index, and I’m not a big fan of index or indexes as a, probably a better English, but because the Case-Shiller index only looks at the top 10 or 20 markets. So it’s a very, very general barometer, but it’s a good reference point to make the point I’m trying to make here. Home prices reached a 14 year high this past October, according to case Schiller or the case shiller index, which covers home prices in the top 20 major metropolitan areas. And that national index is now up 24.5% from its former high, which was in July 2006. Now that doesn’t mean that we’re in a bubble. Remember all real estate is local. And so you can’t look at housing as a quote-unquote national housing market. There’s no such thing, it’s all local hyper-local, but in just very broad general terms, you can just see that we’ve had a tremendous year and in a pretty strong run from what was essentially our last high, 14 years ago to where we are today.
So that’s incredible if you’ve been in real estate if you’ve been investing in real estate, and if you haven’t, you know, it’s never too late because well, located quality investment property in a good market that generates income is never a bad investment. You know, just use your head and have the right team, which is actually a good segue into the question that I’m going to answer here today. But just one last comment about where we’ve been over the last year. If you look at the year over year gain on average, and I hate to use the word nationally, but essentially according to the case, Shiller index, we are up 8.4% year over year. So if you own real estate or you have a portfolio, if nothing else, if you haven’t advertised your loan or you haven’t had any cash flow, it’s been a wash for you.
If you just look at the equity gain from the appreciation that we’ve seen over the last year, you have already made an 8% or more gain just in the value of your property. Now I know that’s a paper gain. That’s not a realized gain, but that’s okay because if your property continues to appreciate year after year, on average, you are increasing your wealth and your equity, and you can use that equity down the road for other purposes, whether it be increasing your portfolio size, increasing your cash flow, whatever it may be. And that’s a conversation that we’ve talked about on and off over the years here on the show, we talk about it on our blog articles on our website. And of course your investment counselors here with us, we’ll have that conversation with you as well. When you get to that point, it’s a little bit more of an advanced or second step strategy.
But today I got a question from probably two relatively sophisticated people. I’m just going to refer to this person as a C-A-B that’s their A.K.A or initials. If you will. I just don’t want to use their real name here, but he writes in, he says, hi, Marco, I’ve been listening to your podcast for a couple of months and sometimes feel anxious about being the type of person number three. I’ll explain that here in a minute, I am a 38-year physician married to another physician. We owe somewhere about $400,000 in student loans. Yikes, but make about $650,000 combined in South Texas. I need to start! I want to start! Thanks for everything! Well, CAB real name hidden. Thanks for writing in and thanks for sharing and being open about your situation. So I guess for the listeners who don’t understand what I’m referring to, as far as person, number three, in a recent but different podcast episode, I talked about three different types of people.
At least the way I classify them. And there’s the people who make things happen. The people who watch things happen. And then there are people who wonder what happened, and we all spend time in each three of those categories, but it’s good to be aware and conscious and stay in the first category as much as possible, especially with stuff that is important to you, your major goals, your family goals, your financial goals. So you want to be the type of person that makes things happen. Or as one of my past mentors used to say, make crap happen. They called me an MCH and they wanted us to be an MCH. So you want to make things happen. So you want to be person number one when it comes to the important things in life. And I stress the important things in life. So you don’t want to be the person who ultimately, you know, years down the road or decades down the road realizes, geez, I was the person who just wondered what happened and you know, everything that was important in the whole realm of ignorance.
And you have control over that because you can educate yourself and you can take control of the things that you want to control. So anyway, that’s what he means here by a person type number three. So the thing about student debt, you have a lot of student debt here, $400,000 combined. Now, granted, I understand it’s very expensive to become a physician, especially for the two of you, sadly student loan debt in the United States, at least in 2019 was $1.4 trillion. And that’s trillion with a T not a B roughly 14.4% of consumers have student debt or a student loan of some kind. So it’s a significant portion of the US population almost 15%. And the average is really quote-unquote only about 35, $36,000. Washington DC actually has the highest average student loan debt of $56,000 per student, which is considerable. But overall it’s, it’s not a great thing to have and carry with you.
So obviously you want to pay that off sooner than later, but the good news is, at least for you is you make a significant income and you are not in an expensive state high tax state. So if you’re in Texas, not New York, California, or places like that, where you have high state income tax, you should be able to pay off that loan relatively quickly. Now, I don’t know what the terms of that loan are in terms of interest rates and pay off periods. So you might want to consider that in your financial decision and equation, but as Robert Kiyosaki would say, you know, as you pay for your due debts with income from your assets. So the math would probably tell you that if you invest that income that you make and save for investment purposes towards income-producing assets, like quality rental real estate, the income from that real estate should be enough or more than enough to pay your monthly and annual payments for your student loans.
And you can amortize that quicker. So just think of it that way. So rather than taking your excess income and paying it straight to the student loan, what you need to do is take out a pen pad and a calculator, run the numbers and just see if a portfolio of rental real estate will generate the income that will allow you to pay off that loan, make the monthly payments as well as have money left over, which would be passive income for you. And that would really be the smart way to go about this. Again, this is a math question and a math problem. So you have to work the numbers, but, uh, if you are able to make 650 K a year, and I know that’s not the case for the majority of people who listen to this podcast, but if you make a six figure income, you should be able to save enough each and every year for at least one down payment, if not two, three, five, or 10.
So my advice is to, um, and again, I’m not really telling you what to do, but if I were you, I would save as much as I can as quickly as possible and deploy that capital into as much rental real estate as I can in good markets and in good neighborhoods with the right team. And you should be able to do that relatively quickly, but it sounds like your core issue is anxiety and you are maybe afraid to pull the trigger. Now, usually, that fear comes out of a lack of understanding or knowledge. It’s really just controllable ignorance, and that is easily resolved because you’re doing the right thing already. You’re listening to this podcast, maybe another podcast, you’ve maybe reading some books and educating yourself with various material and content. Fantastic. Keep doing that. But what I suggest you do is continue down that path of learning as much as you can with the time that you have available, but don’t think that you need to know everything about everything because you never will. And that is not necessary. You just need to understand enough to ask the right questions, put the right team together and continue to learn as you go. And if you take that approach, the anxiety should diminish.
The key thing is, is that you want to get to a point where you feel comfortable enough to take the next small step, the baby step. You don’t need to take a giant leap. You just want to take small baby steps. Cause every time you take small baby step, your confidence level increases. And as you learn more, your confidence level increases, and you’re going to find that you’re going to start walking a little bit quicker and a little bit quicker, and then you’re going to have a stride in your step. And then you’re going to walk like you are one of the most confident people in the room. You’re not going to have that anxiety or fear, but you do need to start and you start with baby steps. And the next thing to do is have a conversation with one more people that can help and support you and the people that will essentially help you build your real estate portfolio, invest wisely in the right markets with the right properties and the right team members.
Now that’s obviously a shameless plug if you will. But that’s obviously what we do at Norada Real Estate Investments. You don’t need to work with us. You don’t need to use us, but you know, as far as the educational part of it goes, you know, feel free to take as much as you like. But having said that, I do suggest speaking with one of our senior investment counselors here, just to help answer the most important questions, those questions that are at the top of your mind and get you facing in the right direction, much like a compass. So you can start taking those baby steps in the right direction. I know you have the financial resources and I’m guessing you probably have a very good if not stellar credit profile between you and your wife. So you really have two critical things. The two C’s – capital, and credit.
Now you just need to start having that conversation about where does it make the most sense to invest them. In other words, what markets that will fulfill your investment goals is that a growth strategy or an income strategy or combination of both what I would essentially call a hybrid approach and get that first property under contract, do your due diligence to find it with our help or someone else’s help get it under contract, continue your due diligence, work with your lender, your loan officer, to get the financing in place. That’s the pain in the butt part that you know, for it is for most people. And it is for me. I just don’t like having to deal with all those documents, but once you do it one time, it becomes infinitely easier the second time, the third time, because they already have a file on you.
And you just have to refresh the documents by providing a couple of updated bank statements. So it becomes infinitely easier as you go. By the time you get to that second or third property, you’re going to realize that this is not rocket science and this is not complicated, but you’re going to feel really good about yourself and really good about what you’ve built. I know that every time I hit that five property mark in a market, I feel like, okay, I’ve made the footprint I need to make in that market. And I feel really good about it, and I get excited and I move on. So I want you to take that same approach. I want you to target three to five properties in three, five markets, and that establishes a very sound investment portfolio for yourself and for your family and I guess for your future generations.
So I don’t know what else to tell you to help you overcome your anxiety other than just educate yourself, take baby steps, but don’t stop be consistent in taking those baby steps. And believe me, millions of people have done this over the last, you know, however many decades. So there is no reason why you can’t. I think most people can. So anyway, I hope that helps again. Thanks for writing in and thanks for submitting the question and that’s it for today. So once again, for everybody listening happy new year, I think 2021 is going to be an incredible year. Interest rates are going to stay low. Real estate is still very much strongly in demand and I’m very bullish on it. So I just think the next few years are going to be incredible for people to take advantage of this opportunity.
That’s it for today. If you have any questions about real estate finance or investing, and you’d like me to try and answer them on the show, or maybe through my email, just submit those on our website at passiverealestateinvesting.com or go to AskMarco.com. It’ll take you there as well. Remember to subscribe to the show we want you to never miss out on another episode, share the show with your friends and family and leave us a rating and review on iTunes. We greatly appreciate that. Thanks for listening. I will see you on our next episode.
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