The Greatest Financial Gift in America? How 30-Year Fixed Loans Build Real Estate Wealth

Adiel Gorel (00:00)
That would be the biggest financial gift in the world because inflation would become your best friend. It would erode the real value of the loan month after month, year after year, and you’re not going to have to wait for 40 years. Probably after 10, 12 years, your loan is going to look so tiny it’s going to be a joke and you have built a lot of equity and wealth.

Cody Crabb (01:52)
Welcome back to the Real Estate Pros podcast. I’m Cody Crabb with Investor Fuel and today I’m joined by Adiel Gorel, owner and CEO of International Capital Group. He spent decades helping investors build wealth through real estate and today we’re talking about as what he sees as one of the greatest financial gifts available in the United States and how investors can use it strategically to help them build long-term wealth. And if that’s not enough suspense, I don’t know what is. Adiel, thanks so much for joining us today.

Adiel Gorel (02:21)
It’s a pleasure to be here, Cody. Thanks.

Cody Crabb (02:23)
Yeah, so just to get started here, for people that are just getting introduced to you, ⁓ what do you do, who do you help, and ⁓ tell us about your company.

Adiel Gorel (02:35)
Well, maybe I’ll give a short background. My background is actually all in high tech, Silicon Valley. I lived in Palo Alto. I taught at Stanford, electrical engineering and computer science. Then I got my first job at Hewlett-Packard Labs in Palo Alto.

Cody Crabb (02:38)
Sure, yeah, that’s great.

Adiel Gorel (02:53)
And of course, they paid me much more than Stanford did. So I was a very young guy feeling like, whoa, look at my salary. It’s really big. Just like today when you get a job with Google or something like this.

And then my colleagues at the research lab that I was in were some of them were in their 50s and 60s. I was a young guy. I thought, wow, they must be really wealthy working here for 30, 40 years, getting paid like this. When I got to know them socially, I realized they were not wealthy at all.

They just own their own home and a 401k. That’s it. Said there’s no way I’m going to work here for decades and look like that. I have to build something on my own. My family was in real estate development. So as a kid, I didn’t care about what my family did. I just wanted to play, but I couldn’t not be exposed to the power. So I said, okay, I’m going to buy rental homes with my great salary that I’m making in Silicon Valley with my great credit. And I’m going to build, you know, an empire so that when I get to be 55,

or I look completely different than my colleagues and I did I started now that was a long time ago it was in the 1980s so in the 1980s there was an unwritten rule only by real estate within 30 minutes drive of where you live

30 minutes, that’s it, do not exceed it. And everyone was following the rules. So I did too. I was a good boy. I was living in Palo Alto in Silicon Valley. So I bought single family rental homes in Silicon Valley. I bought a few and then I quickly realized I couldn’t build an empire there.

because even though it was the 1980s and all the numbers were much lower than they are today, the ratios were just as bad. In other words, the rates, the rents were way too low relative to the home prices. So I said, I’m going to break the rule of 30 minutes and I’m going to research and find a place where the numbers work better. Now, of course, in the 1980s, I didn’t have the web and Sergey Brin and Larry Page, I believe were in kindergarten.

Cody Crabb (05:00)
You

Adiel Gorel (05:01)
but

I still had access to my research lab at Stanford and they had the ARPA net, which is the precursor to the internet. So with a little search, saw that if I flew an hour and a half from San Francisco, I would land in a smaller city that they used to call, I think they still do that, Las Vegas was the name.

Cody Crabb (05:23)
Yeah, I think I’ve heard

of it, yeah.

Adiel Gorel (05:25)
Yeah,

you’ve heard. So I could see that in Vegas I could buy homes for one quarter of the Silicon Valley price but much to my surprise the rents were more like one half of the Silicon Valley rents. That was so much better. Started to fly to Vegas every weekend.

Now, the people in Vegas had never seen at that time somebody who is buying out of state. Never seen such a thing. Everybody was buying 30 minutes from home. So, and I always looked younger than my age. Back then I looked like a boy. They were skeptical. They thought I was going to waste their time. Nobody wanted to work with me. So I used the first three months or so to find what I knew I had to find, which is a property management firm. Cause obviously if I live in California and I’m buying in…

Cody Crabb (07:03)
Mm-hmm.

Adiel Gorel (07:03)
Nevada

I need I found the management firm that I liked but I still very nervous because I didn’t have a chance to Try them in the field Finally a broker took pity on me and said I’ll find you homes and I started buying now. I was always very aggressive and I bought 22 homes in my first year now before people get before people get impressed with this

To be fair, I’ll say number one, back in the 1980s, Fannie Mae didn’t have a limit of 10 loans. They did not have a limit at all. I could get as many loans as I wanted via Fannie Mae. Also as an investor, I was allowed to put only 10 % down payment with private mortgage insurance or PMI, which I did because even though my salary was good, I was young. I didn’t have a lot of cash. wanted to stretch my cash. Finally, every one of the homes I bought, the average price, don’t laugh now, please.

Cody Crabb (07:57)
no, what is-

Adiel Gorel (07:58)
$39,000 for the whole thing. So now buying 22 homes doesn’t seem so hard for somebody who works in Silicon Valley. Still, I had never met a person with more than 20 homes, so that was still, I felt good about myself. Now, during that first year, my colleagues in Silicon Valley were making terrible fun of me. What are you doing? Buying out of state? You’re insane. Nobody buys out of state. But…

Cody Crabb (08:00)
Ugh.

Yeah.

Adiel Gorel (08:23)
After a year they saw me with my 22 homes in Vegas plus a few more homes in Silicon Valley. The logic of the engineers started to work and they said, you know, we understand we want to do it too. Said you should go do it. It’ll change your future. In fact, I told them if I do nothing else in my life and leave these 22 homes, my future is taken care of completely. My retirement is all done. They said, come on.

You know, we don’t have time. In Silicon Valley, you work here. We don’t have time to go to the bathroom. Come on, no.

Please, you are there with your managers, with your properties. How about you lead us? I said, okay, I’ll lead you. So I led a group of about 20 engineers and over about three and a half years, we bought something like 250 homes, not as a group. She bought six homes for herself. He bought four homes for himself. I bought a few more, but I was sort of like the leader of the group. So even the very cautious engineer who bought just one little home.

Managers knew if he was not happy he would complain to me now I wouldn’t be happy and every other manager in Vegas at that point is calling me come to us move to us We are better. We are cheaper. We are nicer. We are taller. We are prettier who doesn’t want to manage 250 home plus the many dozens we may still buy So I mean even the one guy who bought just one little home got the clout or the power of 250 homes

Cody Crabb (09:30)
He ⁓

Yeah.

Yeah.

Adiel Gorel (09:48)
Well, I started liking it much more than my high tech life, which seemed very boring by comparison. And also because what I was doing was so unusual at the time, I started getting invited to speak in some Silicon Valley companies about it, about retirement and how to do it with real estate and some investment clubs. It’s one investment club. I was speaking in San Francisco. I had no idea, but there was a reporter for the San Francisco paper in the crowd.

Sunday paper there’s an article then the NBC morning news the whole thing was too much fun and I felt like I was helping my friends build their future helping so finally I left my high tech behind my high tech life and I formed our company you know ICG about a little more than 40 years ago actually and my investors since then bought more than 10 000 homes

In about 30 markets in the US, we’ll talk about where and why, but that’s ⁓ where we are. So, and now I’m helping people not only from Silicon Valley, although I get a lot of people from Silicon Valley, because that’s my own background, but doctors, lawyers, nurses, teachers, truck drivers, you don’t have to be rich to buy homes in affordable places. And so, and because I’ve been doing it for 40 plus years, this is my 42nd year doing it.

Yes, I started when I was six months old. No, no, it’s not true. The results are in. have thousands of people retired powerfully, became wealthy, sent their kids to the best schools in the country without any help. So, I mean, the results are in. ⁓ So now when I started, if you strain very hard, really, really keenly, you will detect

that I speak with an accent, right? Yes, you do. Just a little. So when you come from another country, the habits and rules and facts of another, of different country really stand out to you. Some of them are different. And one thing that stood out to me in the United States,

Cody Crabb (12:20)
I think, yeah, I think so. Just a little bit, yeah.

Adiel Gorel (12:42)
is that there is an unbelievable financial gift given in this country that amazingly to me most Americans don’t think about and the reason I think is because they are born into it and they think it’s normal it is not normal so what’s the name of that gift everybody knows the name the name is the 30-year fixed rate loan so some people are listening now and saying what there’s nothing new here come on that really

Here is what happens when I speak in Europe. I tell the Europeans, my Americans can get properties with a loan called 30 years fixed. The European says, what does that mean? I say, well, like the name implies, the monthly payment principle and interest, the PI, is fixed forever. Nothing will change it, no matter what happens. So inflation, it’s always the same.

In fact, if the rates go down, you can refinance it down, but it never changes. And then the loan balance, how much you owe, even though it goes down a little bit with your principal payments every month, also doesn’t keep up with the cost of living. The Europeans treat me very harshly. They say, excuse me, sir, but you clearly don’t know what you’re talking about. I can’t believe I drove a hundred kilometers to hear you speak.

you make no sense and we are going to prove how silly you are with logic so they say you have inflation in the US right yes you always do right yes we do sometimes it’s high sometimes it’s lower but it’s always there true yes 40 years ago you bought a postage stamp in the US for four cents now it’s 78 cents and going up again

40 years ago you went to the movies in New York City for two bucks, now it’s $16. If you go to Whole Foods today and buy a beautiful organic avocado, it’s gonna be $3. You know, we know, everybody knows, in 10 years it’s gonna cost $6. Inflation. You wanna tell me that in the middle of all of this, where the price of everything in the United States constantly goes up?

because of inflation, making the dollar weaker. You need more and more dollars to buy the same amount of goods. Somebody is going to be moronic, stupid, idiotic enough to give you a loan in the midst of all of this. It will be the only thing in the US economy never to budge while everything else goes up and up and up. If that were true, and it can’t be true because it’s impossible and you’re stupid.

That would be the biggest financial gift in the world because inflation would become your best friend. It would erode the real value of the loan month after month, year after year, and you’re not going to have to wait for 40 years. Probably after 10, 12 years, your loan is going to look so tiny it’s going to be a joke and you have built a lot of equity and wealth.

Then I tell them, you know, you make a lot of sense. You really do. It sounds impossible. It sounds too good to be true. How about you look up and see whether we have it or not. they’re, my God, you really have this greatness in the United States. The next question is always the same. If the Americans can have this unbelievable gift, why don’t they drop everything they do every day and run and get as many of those as possible? And my answer is always the same. I don’t know, but I sure did.

So you know, I’ve been doing it for 40 years. I could have retired nicely, comfortably more than 25 years ago. Why am not retired? No American I’ve ever met thought about the meaning of the 30 year fixed rate loan in the face of inflation with one exception.

Cody Crabb (16:51)
I’m trying to tell them to, yeah.

Adiel Gorel (17:13)
I was in touch with Warren Buffett in 2012. Warren Buffett got it. In fact, there’s an article in Entrepreneur Magazine about my interaction with him. And he knew about the 30-year fixed rate loan and how special it is. So because no American thinks about it, because they were born into it. Again, it seems normal. I feel like I have a message to share that’s too valuable, so I’m not retired.

But I’m finding balance in my life. I play music in my home studio, which is in there. I write the lyrics. I play the lead guitar. was just in Nashville with a live band for three nights. And I have a health and wellness podcast, the Adiel Gorel Show, where I try to simplify the message of the best researchers from all over the world. So people can really, what can we do now for our health, which is very simple. And I just finished the book.

which came out last week you know it’s on Amazon called hitchin about my many years hitchhiking in my 20s with no money which creates so many adventures and dangers I’ve been meaning to write this book for years but now it’s out there hitchin and in fact what we do is we start every chapter with the verse from one of the songs related to the content of the and then we have a QR code you can go to the actual song on YouTube so it’s really

Cody Crabb (18:23)
Wow.

Adiel Gorel (18:36)
But anyway, I still meet with people, I dedicate more than half my time, and people have become quite strong thanks to this because in my experience between 12 and 14 years…

Cody Crabb (18:37)
Wow, yeah.

Adiel Gorel (18:52)
that loan that you have will look like it’s roughly about a quarter of the value of the home. Even if when you took it, it was 80 % because inflation constantly hammers it. So I think buying single family homes or duplexes, you can get the 30 year fixed rate loan on those as well. Actually, technically you can get it even on fourplexes, but no more than four.

And I discovered a few years into the game that it’s better to buy brand new homes. And I even have an article that I wrote for a magazine, why brand new homes? I’ll be happy to share it with your readership. Send me an email. Anyways, send me an email to info at icgre.com. ⁓

Cody Crabb (19:31)
Yeah, well if you send me the link we’ll put that for sure we’ll put that in the description

Yeah, I’ll do that for sure.

Adiel Gorel (19:42)
I’ll share my TED talk about it, my PBS show that I was invited to do about it, all kinds of things. But the point is, it’s really a life changer. Now, so where do we buy? mean, I’m in the San Francisco Bay Area, a horrible place to buy, in my opinion, investments. So I like the Sun Belt states.

Cody Crabb (19:44)
Yeah.

Yeah.

Adiel Gorel (20:04)
I’ve been a student of the demographics in this country for long time. And to me, the demographic flow goes to the lower states. By the way, Utah, to me, is also kind of in the sun belt in a way. Yeah.

Cody Crabb (20:16)
I know what you mean. Yeah.

Adiel Gorel (20:18)
I mean, those

are states like Nevada, Arizona, Texas, Oklahoma, Louisiana, Alabama, Georgia, Florida, Utah is there for me. We even invested in Colorado. We don’t invest in the Midwest or the North. And then I like to buy in large metropolitan areas for job diversity.

in the suburbs because it’s families with kids, the kids go to school, it’s like a root in the ground and makes it stable. Brand new homes. So on my short talk, you know, my TEDx talk, which actually you can find on YouTube, I say, here are the steps by a single family rental home, which is brand new in the suburbs of a large metropolitan area in the Sunbelt states that’s affordable.

put a relatively small down payment, get the 30-year fixed rate loan, let the local property manager, which of course we have all over the country, lease the home for you, and then proceed to do the hardest action for a human being to do. Nothing. Nothing. Just wait. Wait.

Cody Crabb (21:23)
It’s

a every that’s you hit the nail on the head that is hard

Adiel Gorel (21:26)
And

by the way, you don’t know how hard it is to do nothing. I get calls from people, there’s a war, there’s a dish, I should sell, what’s going on? The world is… Just nothing, nothing. Just wait and you’ll get wealthy. So I mean, here’s a typical story of what it looks like. I get a call from one of my investors from Silicon Valley, says, remember me? I bought my first home with you, you know, in my early 40s.

I was working in Silicon Valley, I was very busy. It was important for me to see that the property management that you set in place in all of those markets really does the lifting because I didn’t have time to do it. So I bought just one home. It went well, it rented, it got boring. I bought another one. I made sure to put small down payments because number one, I wanted to maximize the gift called the 30 year fixed rate loan. Once you explain, once I explain it, everybody understand in one minute, you know, it’s not hard.

Cody Crabb (22:18)
Yeah, exactly,

yeah.

Adiel Gorel (22:20)
And he says, I ended up buying 19 homes. Again, does that sound impressive? At the time he was buying these homes in his early forties, the average home he was buying was brand new for $150,000, putting a small down payment for Silicon Valley guy, not hard. And he said, last year I turned 55. I looked at my 19 homes. And even though I started with a very high mortgage on every one of them, after 13 years,

my mortgages were roughly a quarter. So first of all, I was happy because over 19 homes, had millions of dollars in equity. That was great. Second, I took four of the 19 homes and I sold them.

I didn’t do anything fancy, no 1031 exchange, it’s nothing. Sold four homes, paid my tax. And used the proceeds to pay off the remaining small 15 loans. And with 15 free and clear homes, I retired from my Silicon Valley job. Thank you, thank you. And then he says the sentence that everyone says in the future, everyone, including me. I should have bought more.

Cody Crabb (23:29)
Yeah. You know, I never really thought about the fact that inflation would affect the loan itself. mean, it seemed you’re right. It seems so simple when you explain it like that, but it’s it’s it’s so obvious. And then it’s you’re right. Why don’t we do that? So a question I had for I would have for you is like, why so why brand new homes? Yeah, you mentioned what what advantages do you see there?

Adiel Gorel (23:51)
I write about it in the article but I’ll very quickly cover it. one, ⁓ obviously for many years you’re not going to have serious maintenance issues. Everything is under warranty.

either by the builder and or by the air conditioning and the water heater you know the manufacturer so everything is under warranty for quite a bit of time it’s brand new so you’re not gonna have repairs it’s very attractive to tenants and even more importantly when you buy a from Joe Blow a used home Joe Blow could be a great guy very nice guy he can’t give you very much you negotiate on price and you’re done

The builder has all kinds of ways to give you benefits. Or we’re going to throw in the covered patio for free. That’s a $7,000 thing to buy. Or we’re going to throw in the sprinkler system for free. These days, what are the builders doing? The media has scared everyone that their rates are very high.

They’re not high. They’re in the sixes. It’s very low. But they’re higher than during the COVID time, which were they were in the threes or even two something. So.

they scared people and people are sitting on the sidelines. So the builders are saying, okay, I’m going to buy down the rate. So my company has an event every quarter where we bring the market teams, they show us their properties, they talk about the market. In the last event that we had on May the 7th, we had builders buying down the rate to 4.0 % fixed for 30 years. So builders have a way of giving you so much more than a regular seller.

Cody Crabb (25:35)
Yeah, that makes a lot of sense, yeah. And especially the way that you framed it with ⁓ the warranties and it just all makes so much sense. And so for sure, we are gonna link all your article and your TED Talk and stuff, because this seems like something that our audience is gonna want to explore in detail. ⁓ Where can they find out more about you specifically? You said the book, is there just a website they can go to to find out about your stuff or about your company?

Adiel Gorel (25:59)
Yeah, my stuff,

my books are on Amazon. This last one is an adventure book with music inside. It’s really a fun book, but I mean, it’s on Amazon. Just put my name. I have seven books on Amazon now. And one of them is a real estate book, which, well, I have four or five that are real estate book, but one that could be a good reference for everyone is a book called Remote Control Retirement Riches.

Cody Crabb (26:31)
Cool, well thank you so much. ⁓ I will be definitely checking those out for sure. ⁓ Thank you so much, Adiel, for joining us today. ⁓

Adiel Gorel (26:38)
by the way, if you want

to reach us, you know, our website is icgre.com. If you want to reach me personally, just send us an email, info at…

icgre.com. I will meet with you one-on-one. I enjoy it. I feel like I people change their lives. And we have a big event every quarter. The next event is on Saturday, May the 16th. It’s by Zoom. You can register for free on our website, icgre.com, under events, of course.

Cody Crabb (27:12)
Wow,

that’s a heck of an offer. I would absolutely take advantage of that. That’s not many people would offer something like that. So thank you so much. ⁓ Again, it’s been a real pleasure. Listeners, thanks so much for joining us as well. You can go ahead and subscribe and like and comment and all the things. Make sure to visit audio on the internet and one more time audio. Thanks so much for providing such awesome value and advice to our audience.

Adiel Gorel (27:37)
Thank you, Cody, I appreciate it.

Cody Crabb (27:38)
Yeah, have a good one.