Interview w. Kathy Fettke of Real Wealth Network

Kathy Fettke is Co-CEO of Real Wealth Network and best selling author of Retire Rich with Rentals. She is an active real estate investor, licensed real estate agent, and former mortgage broker, specializing in helping people build multi-million dollar real estate portfolios that generate passive monthly cash flow for life. Kathy is a frequent guest expert on CNN, CNBC, Fox, Bloomberg, NPR, CBS MarketWatch and the Wall Street Journal. She was also named among the “Top 100 Most Intriguing Entrepreneurs” by Goldman Sachs two years in a row. Kathy is passionate about teaching others how to create “real wealth,” which she defines as having both the time and the money to live life on your terms.

Kathy's real estate story started when her dad invested in an apartment with a friend and found out via postal mail that the apartment had been sold and that he had 3 weeks to do a 1031 exchange. Kathy helped him find a replacement property, a 6-bedroom home she and her husband rented from him, and they rented out a few of the rooms, and turned it into a triplex of sorts with tenants she found on craigslist.

In 2002 Kathy's husband went to the doctor's in 2002 and found out he had melanoma that had spread to his liver and he was told he had 6 months to live. The doctor was wrong and her husband is alive and well, but the diagnosis prompted Kathy to figure out how to be a stay-at-home mom, allow her husband to heal, and keep her family afloat financially. She was a news reporter in San Francisco at the time so she turned her radio show into a way to earn money passively by interviewing self-made millionaires and learning how they succeeded. She got a sponsor for her show who was a guy involved in mortgages and took the information she learned from the interviews and her sponsor and did it herself. She made $10,000 on her first loan and kept going from there.

The Real Wealth Network represents everything from vacation deals and development projects to single family rentals. Values in northern California have peaked but people still have the opportunity to sell a property they bought years ago. 

I asked Kathy where she thought we were in the economy now and what she see coming down the pike in real estate.

"We are at a very different place than 10 years ago. The last recession was caused by stupid loans and bad lending– loans that people could never pay back. A lot of people are waiting for the next time for that to happen... but it's probably not going to happen any time soon. In the last ten years, the people who got into real estate, who were able to buy, they bought houses at massive discounts for far less than the houses were worth because the market over-corrected. There was so much inventory on the market, so much distressed property, and so many people wiped out, that couldn't buy that stuff, that properties were selling for very cheap. Those who were lucky enough to move forward and buy locked in rates of 2%-3% and since then the values have gone up so they have all this equity, they're locked into a low payment, and people are not really tapping into that equity the way they used to. People who own assets are being careful, being safer, and not waling away if values dropped because they're locked into low rates. Additionally, from 2008-2012, 2012 was when prices hit the lowest, so builders couldn't compete with all that distressed inventory. it wasn't until the last few years that those who were able to buy land... started building around 2013, but not enough to keep up with population growth. We have over 10 million more people in the US since the last downturn but we don't have 10 million new homes. We partnered with builders and build all over the country but you can't build it for what people can afford. So if somehow you can provide housing in that affordable range, you will be busy for the next decade. There is so much debt out there that a large portion of the population isn't able to qualify for a mortgage because they have so much debt so they're forced to rent. So there's an incredible opportunity to provide that housing, to be a landlord, and offer affordable rentals to people." 

Kathy and I agreed that the bottom line is, even if we do see an economic softening, we're not going to see a large effect in real estate. Kath added that there's definitely a recession coming; the fed is raising rates and that means the economy is overheating in some way. At the same time they are "unwinding the balance sheet" meaning the flat lined economy could only be revived through manipulation of the currency. The way the fed did that was by creating money out of thin air, throwing it into the economy– quantitative easing, by buying bonds. They're now undoing that and selling those bonds which drives interest rates up. We will see a slowdown, Kathy says, but we're not sure where or who will be affected.

You can learn more about Real Wealth Network at www.realweatlhnetwork.com where you can also join for exclusive information.