The Demographic Cliff

Hence, you need to buy real estate only if you need it long-term, or to buy foreclosures in this global real estate bust with the intention of renting them out for positive cash flow.

we tell real estate investors to avoid property as a long-term, appreciating investment. That strategy is now dead. Instead, the best strategy for years to come is to buy real estate cheaply in foreclosure and then rent it out for positive

The Best Leading Indicator The best indicator? People do predictable things as they age. That’s it in a nutshell. So, let’s look at how demographics drive economic trends, from the macro to the micro, in modern middle-class economies.

The economic truth is that you can’t have success without failure, you can’t have accountability without consequences. Governments are eliminating these crucial factors to give short-term relief, at the expense of killing long-term growth and innovation.

If you want to see the future, watch demographic trends, as they are the ultimate leading indicators. Even better: most economists, investors, and businesspeople don’t understand this, so it creates a unique advantage for you as an investor or business.

That next boom will focus on emerging countries, including India, Southeast Asia, Latin America, and to a lesser extent China, because its population is aging rapidly.

One key insight into these very high income households is they do best in bubble booms, like the 1920s where they controlled up to 45 percent of net worth, and the 1990s and 2000s, where they reached closer to 40 percent (although some studies found their assets reaching as high as 45 to 47 percent in recent peak years). (See Figure 1-18.)

Vacancy rates in cities in China are already 27 percent from overbuilding and speculation. What happens if over 220 million of the unregistered leave? Overbuilt cities become ghost cities (like Ordos and many unoccupied cities that already exist) and real estate prices collapse 60 to 80 percent or more! Everyday Chinese save 50 percent and the top

The old-fashioned way of making money on real estate (i.e., the Monopoly game) is back. You don’t buy it for appreciation—you buy it for the rents.