Building Costs and Inflation – Episode 418

This transcript was auto-generated and may contain errors.

[00:00] Partners, welcome to the podcast. All of the noise about inflation and building costs and everything else going up. Well, there’s a way that you can look at it differently. Kim Butler, I’m excited to have this conversation with you today. Thank you, Spencer. It’s always a joy to have a conversation with you. Well, you know, you’re not one to dive into the news, but just for sake of having conversation with people, I’m sure you’ve heard others say, wow, I’m doing this edition on my house and it costs 30% more. Or you hear about other costs and it sounds like it’s out of control. It’s this world that we live in. Have you heard things of the nature as well? I have. As a matter of fact, as you’re so aware, because of all the good video work that

[00:50] son did, Todd’s solar shop had a bunch of copper and I mean a bunch of copper wiring that we purchased a couple of years ago and installed in the shop. In fact, I’ll raise my hand and say, I pulled a little bit of it, like one 10th myself, the pulling of wiring through conduits, not a fun job. So the electrician was out recently and said, and I think his number was double. He said, I think you should be so grateful that you bought said copper wiring because now it’s, and maybe it wasn’t quite double, but 30, 40, 50, a hundred, whatever percent more. It was a lot more. And it isn’t a really interesting thing. So guide me a little bit. I can keep going there, but how can we help our listeners know what to do about

[01:50] that? Isn’t that really our question? It is. And I think there’s a lot of ways to navigate this. So we’re seeing this in the building world. I talked recently with a builder that I know, and here’s the dynamic that’s changed. So we’ll rewind the clock about a year ago and the way that it works with a lot of builders, depending on the marketplace, they’ll go find a tract of land. They purchase it. Then they start to spec out what that would be. They’ll pre-sell some of those houses and then it takes X amount of months for the house to be done. And there you go. The transaction’s over. Well, with the rising costs, what’s happened is that the builder would get locked into a contract. And if they didn’t have good contracts,

[02:39] like this was bad, really bad, they would go through. And by the time that they broke ground to the time that the house was finished, they were upside down. They had no margins at all. And so builders are now having to say, hey, guess what? We’re not going to pre-sell this to you. We’re going to wait until a couple of weeks before it’s done. And so we’ve seen building costs, as you mentioned, 100% in some areas, 30% all across the board. Luckily, lumber prices are starting to go down because the supply chain and whatnot. We all have to look at this and decide, okay, well, what is it that we are going to do to protect ourselves but to also thrive? Because we can’t just think from security. So I think we

[03:23] can have those conversations. One is understanding the different shifts in prices. If a person’s not aware that copper is so much more or that lumber is so much more, well, that’s pretty detrimental to them. AMT – It is. And it’s interesting, too, because bringing up again the question, well, what can you do when you are aware of such things? Because you’re going to be working on a project, you’re doing some research around the project, you can look at the lay of the land. Thank goodness, the web, it’s actually easy to get the history of lumber prices or whatever it is that you’re working on. I think that’s an important thing to learn about and know. And then it’s also important, and I go back to a comment that I’ve heard my husband,

[04:11] Todd Langford, make so many times when people say, well, what can I do? And the question comes up all the time. It could be lumber prices. It could be how age 87 is the new 65, and we need to be working so much longer. It could be longevity is now 120 or 130 years old instead of 85 or 90 years old. It could be the fact that inflation might run up so high that we’re in hyperinflation. It could be the fact that after that, deflation could happen. Oh my gosh, now what can we do is always the question. You keep going because I’m going to actually steal from some of your thoughts previously because I think first what we do is before we even start to have any of those external conversations or financial conversations, we have to get what’s right between our ears.

[05:11] Yes. That has to happen because if that’s not right, it doesn’t matter what’s on paper. It doesn’t matter what kind of return you’re going to get. It’s all going to go haywire. Absolutely. I’ve just done some recent to sidetrack for a moment story brand work. So story brand is a company, a book, a guideline for how you identify what your clients are looking for and then tell the story to match that and really personalize your story so that it’s true and authentic. In that guidance, they talk about an external problem and an internal problem. Then they actually also talk about a philosophical problem. Well, you’ve just hit the nail on the head. There’s an external problem called inflation that

[06:01] is a challenge and then there’s an internal problem that is what’s going on in the six inches of space between your ears and that we can control. Whereas the external problem, we cannot control at all. Absolutely. Absolutely. And so once we go beyond the brain, that six inches of space, I think that the next step and hopefully our listeners would see this as well, because this is something we’ve touched on, is having your emergency and opportunity fund in place. There’s something psychological. That is, yes. So not only is it a monetary thing, it’s a psychological and I would even say physiological. In other words, it affects your brain and affects your body and your body affects your brain. So that ability to have emergency and opportunity funds enables us,

[06:55] and now I’ll bring forth the quote that I was going to share from Todd Langford, to do all that we can. And so the answer to the question, what can we do is to get ourselves into a situation to do all that we can for as long as we can with all that we have and not be so concerned about the external, uncontrollable issues that are going to come and go and come and go and come and go. Today, it’s lumber prices and inflation. Tomorrow, it’s you need to sell your home and the market is up or down. The next day is you need to buy your home and the market is up or down. And I think there are so many times that we get so wrapped up in analysis paralysis, in what the talking heads on the TV or the radio

[07:46] or the phone are saying, and we really get ourselves worked up into a frenzy, which is not doing us any good at all. And if we would step back and realize that long-term, a lot of this is not going to matter. What does matter is our relationships, our family, the mental space in our head, how it’s affecting us physically. Those are the things that matter both short-term and long-term. Absolutely. And to dive in even deeper on that emergency opportunity fund, there’s a myriad of different assets and things that you can have. And you can look at that and you say, having cash on hand, having money in the bank, if it makes sense for you to have maybe some precious metals, also having a life insurance policy that you can go

[08:37] and have a check sent to you. All of those things are really valuable because it puts your head in the right place and it puts you in the right place. Now, I’m going to botch this quote. So I’m going to ask you, there’s a Dolph DeRue’s quote about opportunities and deals. The deal of the decade comes along once a week. I just quoted it to my son, Robbie, about a week ago because he’s on his third real estate deal, borrowing against the cash value of life insurance, investing in his own home, which then he rents out two rooms and now in a little fourplex and hopefully now in another little fourplex, chomping at the bit because he wanted his deal done. And so I reminded him of that saying the Dolph DeRue’s, the deal of the decade comes along once a week.

[09:33] So true. And so for you as a listener, if you have the Lego blocks in place, meaning you’ve got your mind in the right place, you have the emergency savings in place, you have these things, then now may be the opportunity to find a deal. But the most millionaires ever created was during the Great Depression. So when things go sideways, that may be your time as well. Yes. And won’t there be lots of opportunities coming up in all kinds of different aspects in the stock market and the real estate market and the business opportunities that we have? And holy cow, here’s another quote that we need to have. And that’s from Dan Sullivan. And it is your eyes only see and your ears only hear what your brain is looking for.

[10:28] Oh, that’s so good. I’m going to throw in one bonus of what people can do right now to hedge themselves for inflation of the future, which is if you are putting yourself in a situation where your income is rising or your assets are rising, then the next step is to become an accredited investor. And what that does is it ties in perfect with that quote from Sullivan. It opens up more opportunities, meaning you’re going to have a larger peripheral vision of deals out there and opportunities. Even if it’s not something you want to do now, preparing yourself and getting ready is absolutely essential. What do you think, Kim? Yes. And education has to happen before any kind of investments occur. So that education

[11:20] is free and available, whether you’re accredited or not. And just so that people have the definition in their heads, it’s a million dollar net worth, not including your home or two to 300,000 of income, depending on if you’re married and you want to hear something funny about inflation. Those numbers haven’t changed in a couple of decades, I believe. And so, gosh, is that a win-win? The fact that those numbers have not gone up due to inflation and they sure could have. So more people are able to be accredited today than they were last year and more last year than the year before that, just because of inflation is typically causing our incomes to rise and not causing that definition to rise, at least at this standpoint.

[12:08] Yeah. That’s such a good opportunity to look at it. So I think for all of our listeners, it’s easy to want to dive in and have someone tell you to go buy a specific ticker symbol, or for someone to say, hey, this is the type of real estate deal you should do. And we’re not doing that. This is about your own wins. That’s going to happen upstairs, and that’s six inches. That’s going to happen to create the success for you. And then one thing that’d be really helpful to tie in with and to wrap up of the education is this podcast is free for you as a listener. It’s a library for you to pick and choose what is best. And so if you’re not already subscribed to the podcast, or you don’t already follow it, make sure you do that. And then to go even deeper,

[13:03] Kim has a ton of different books that you can read so that you can find what’s necessary for you to take the next step in your learning and education. Is that a good wrap up, Kim? It is. And I’ll just promote shamelessly. The most recent one, if you’re not aware of it, is called Perpetual Wealth. And it just became live on Amazon a couple of weeks ago, and it’s available as an audio book, thanks to Spencer and his team, a Kindle book, of course, and then a physical hard copy that we chose to do in order to send the message of the longevity behind the information that’s in that book. In other words, buy one for yourself and then pass it on to family members for the next generation to continue the learning.

[13:50] I love it. We’ll put a link to that inside of the description of this episode. Listeners, thank you for tuning in all the way to the end of the episode. If you do have questions, please send those to hello at partnersforprosperity.com. That email is just for you. You send that email in and the team will see it. Kim will be able to help and so will other team members. Thank you for being on this episode with us. Thank you for listening to the Prosperity Podcast. To take control of your money and have it work for you, visit us at partnersforprosperity.com. If you liked this episode, make sure you subscribe and leave a review.