Jason Hartman and investment counselor Adam start the show talking about how people are leaving high tax areas and getting audited by those states after they leave. After the discussion, Jason brings on client Ira Boyd to talk about his real estate journey. Ira started purchasing properties on his own, with some minor success but expected more. He explains that after he found Jason’s network he was able to get better properties and is looking to expand his portfolio beyond the 13 homes he currently has.
Investor 0:00
About 2014 I found you, it was just a perfect fit. I gotta say it just the show just resonated with me. And I just took off, I was one of those freaks that went back and listened to every single episode. Several of them, I listened to him for multiple times, you know, and just couldn’t get enough I was just eating it up. It was fantastic. And that led me to go to some of the events and I went to meet the Masters, which for any of you listeners out there, that is the way to go. I mean, what happens is you get there, you’re in the room with other clients and it inspires you and you start to hear their stories and you see that it’s real and it takes it to the next level. And then not to mention just the lineup of people in the room, you know, the CPAs and the lenders and the local market specialist. It’s just a fantastic place to be to really take it to the next level it It gave me newfound energy.
Announcer 0:50
Welcome to the creating wealth show with Jason Hartman. You’re about to learn a new slant on investing some exciting techniques and fresh new approaches to The world’s most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine self made multi millionaire who’s actually been there and done it. He’s a successful investor, lender, developer and entrepreneur who’s owned properties in 11 states had hundreds of tenants and been involved in thousands of real estate transactions. This program will help you follow in Jason’s footsteps on the road to your financial independence day. You really can do it. And now here’s your host, Jason Hartman with a complete solution for real estate investors.
Jason Hartman 1:41
Welcome to Episode 1152 1152. This is your host Jason Hartman. I’ve got Adam here with me before we introduce another client case study today from our friend IRA Boyd. He reached out booked an appointment in my scheduler and you can do the same. Jason Hartman call Calm slash Jason, if you’d like to be on the show, and we’d love to hear your case studies, I always get such great feedback on these. Everybody really loves hearing them, and then meeting and talking to that person when they come to one of our live events. And of course, we’ve got meet the masters of income property, our 21st anniversary event coming up this Saturday. And Adam, I think before we get into anything today, we got a few things to discuss. We ought to just discuss meet the Masters for a moment. Is that okay with you? That works for me. Okay, sounds good. So, we start this Saturday at 8:30am for registration 8:30am. We are trying to smooth out the registration this year. Hopefully it’ll work. Please come at 830 have a cup of coffee on us. And that’s like a $12 cup of coffee because it’s at a hotel. So it’s got to be better than Starbucks, right? With 1% gratuity 25% they call it plus plus it’s 25% service to And then there’s tax, of course. So it adds up to about 35 34% or something like that. But here’s what you got to know. In the hotel contract it says that the servers do not get the 25%. Is that unbelievable? It’s just every industry and you know, later this weekend, we’re going to really rail on Amazon, Jeff Bezos, the modern day slave driver that he is, and the really appalling conditions of working for Amazon it’s it’s mind boggling. It’s just amazing how the corporatocracy you know we complain most of us that it’s rolling over us as customers right? But it is rolling over the working poor in the worst way. And I know you’re going to say what are you Jason will liberal? No, I’m definitely not but Adams a liberal.
Adam 3:50
I’m a libertarian. And I just think the market has to rise up against this and correct these forces that beat big discussion. If you’re going to call it gratuity, you should get Ever to the people who are doing the serving but and the taxes, we’re going to talk about this New York but I mean, the taxes that you’re getting hit with in California are because they they’re not getting money from anywhere else.
Jason Hartman 4:10
It’s a complicated issue. So we’ll go into that anyway, registration at 830 on Saturday, coffee plus plus. That’s what they call it plus plus. And we will start hopefully promptly at 9am. And we have a big agenda for Saturday, a lot of presentations to get through, and that’s going to be great. Of course, we sent out an email with all of this information, so check your email box for an email from me. We will go until 6pm on Saturday night, we’ll take a two hour dinner break. And then we will reconvene at 8pm for a concert. We’ve got a Rod Stewart tribute band. So please dress in some fun 80s style clothing now. I don’t know if Rod Stewart really is 80s but that’s It’s kind of how I think of him of course he’s got a multi decade career. But anyway, dress for fun on Saturday evening. I think a lot of people are going to wear white. So if you want to wear all white, you know you could call it a white party. So that’ll be fun for Saturday evening and then on Sunday networking and coffee at 8:30am. And we go to 6pm on Sunday where we conclude the weekend. attire business casual, and Adam we will be opening the green room on Saturday at the first break at 10:30am. And you can go into the green room and network with the speakers take photos, do deals or or just kind of hang out and relax between the sessions. And that’s for VIP and elite tickets. We did have someone asked us today if they can upgrade to VIP. I’m sorry, it is completely sold out. So we closed VIP registration about two weeks ago. We do have a couple of tickets left for general admission. Now we have I think sevens tickets. left. Hopefully we’ll sell those before Saturday, Jason hartman.com slash masters. And we just look forward to seeing you all there. So it’s gonna be a great time this weekend. Adam, when do you fly in? I fly in Friday night round. I think I get there about 530 California time. Good stuff. Well, we’ll look forward to seeing you. And we will be just setting up on Friday evening. So it shouldn’t Oh, yeah, I’ll help some
Adam 6:21
of that, I guess, get the manual labor going on.
Jason Hartman 6:24
Come on down and find us Come on down and find us. So hey, a long time ago, right around the time I moved out of California, one of the best life decisions I’ve ever made back in 2011, leaving Golden State. When I moved out to California, I predicted that California and other high tax jurisdictions would build what I call an economic berlin wall in order to stem the flow of not only the brain drain, but the money drain as people leave these high tax Nexus areas and you know, if you don’t know That’s exactly what happened in East Berlin. When the communists were running East Berlin, people were just fleeing communism. And they finally decided over the course of literally one weekend that the brain drain was becoming too costly as people were fleeing to the west. So they they erected the wall, essentially, in a weekend, if you can believe that. It was a believe it was a holiday weekend, as I recall. And they just put up that Berlin Wall all of a sudden in the same as happening from an economic perspective in places like New York, California, etc. Where people try and cheat. They try and cheat the system. You know, a lot of people in California say they are Nevada residents, because of course, there’s no income taxes in Nevada. Adam, the article that either you were I can’t remember who posted in our content group talks about that, right.
Adam 7:55
Yeah, it was, especially now that the tax reform is kicked in. People are getting their property tax capped
Jason Hartman 8:03
at the $10,000. Right at the $10,000. New York is seeing people leaving, especially for states such as the one you just moved to Florida. CNBC has essentially said, Hey, if you’re doing that you’re going to get audited. Yeah, not just a little audit, they’re going to go deep. They’re going to get your cell phone records. They’re going to get your they said, Dennis records. If you have a pet, they’re going to look at where you’re boarding your pet whenever you go on vacation, all of that stuff. I mean, they’re going deep, because it’s a state says they have a $2.3 billion budget deficit. And they want their money. Yeah, they do. They do. And look, you know, the government has the right to do that. I mean, the Franchise Tax Board, the FTB in California, they are relentless. They are vicious. You know, folks, if you’re thinking you’re going to cheat, if there’s anyone out there listening that thinks they’re going to get away with this you’re not because the one thing that will for sure be a dead giveaway is your cell phone because they know Know what tower your cell phone is talking to. Okay? They know what toll booths your car goes through. We live in a surveillance society. There are cameras everywhere. You know, I remember people in Corona Del Mar California and area of Newport Beach where our upcoming meet the Masters is I’d be at the coffee shop years ago when I live there and they’d be talking about how Oh, yeah, I’m technically a you know, wink wink Nevada resident, I’d say well, how do you do that? And that, you know, this was before I knew anything about and say, I just give my buddy in Nevada, my credit card and I say, you know, charge some things on it, it’s okay with me go out to dinner, whatever. And that’s how I will prove to the state of California that I live in Nevada. Good luck with that, you know, first of all, what you’re doing is a crime. Second of all, they’re they’re going to catch you Okay, and then they have every right to so they say that if you want to establish residency, you know, get a doctor and a dentist in that area, register to vote, get a driver’s license, etc. You know, Whatever the usual stuff that we’ve all heard, right, but they will know where you spend your time. toll booths, cameras, you know, pet boarding, like you said cell phone records being the most damning of all. And then people will say things like, well, I’ll just get two cell phones. Oh, good luck with that one. They’ll figure that out pretty easily. Okay. So it’s just simply not going to work.
Adam 10:23
What boils down to is if you want to leave New York because of the high taxes, leave New York. Yeah, if you want to stay in New York, then stay and just be ready to get hit on the taxes. I mean, these states have decided this is how they’re going to do business. And that’s their right. But it’s your decision whether or not you stay or go and if you decide, hey, I want to move to Florida, then just move to Florida. You can still do we live in a mobile society. Anything you can well, not anything but most things you can do in New York, you can do in Florida. Exactly. Exactly. You
Jason Hartman 10:55
know, Adam, you know what always has amazed me throughout my life, even when I was a kid, right? How liars they just feel that they need to lie all the time. I say, you know, instead of lying, why don’t you just make it true? You know, it’s really there’s really just no need to lie just make it reality you you have the choice and the power to make lots of things in your life are reality. So there’s no need to lie about things just just make them true. You know, like you said, Just move you know, you can visit New York, you can be there less than six months of the year. You can do all kinds of things to make it true. There’s no need lie. It’s just not going to be profitable for you.
Adam 11:38
Yeah, and one of the things that surprised me whenever I was reading this article is auditors look at your home and they compare your home in Florida or you know, wherever you’re moving through there to Florida because a lot of my they say they’re going to look and see if your new home is bigger and more expensive than the run in New York. And write to me was amazing because first off a lot of Florida homes compared to New York homes are just not going to be as expensive. Yeah. What if you don’t want to live in a huge house?
Jason Hartman 12:05
Right, right? Well, you know that that one’s kind of a tough one, because those two markets are so different. You know, if you live in Manhattan, you’re obviously going to be in a tiny high rise, it’s still gonna cost you $3 million. But $3 million in Florida will buy you a an estate. Okay. So, you know, they’re just going to, it may not be the same square footage or price, but it’s going to be the overall kind of standard of living on it. You know, there’s, there’s an old saying, if it talks like a duck and walks like a duck, it’s a duck, it doesn’t matter what you call it, it’s still a doctor. Right? You know, they can make sense. And, you know, a lot of these cases go to court and you’ll be arguing them in front of a judge, you know, the judge will make a decision as to whether or not you’re a resident or not,
Adam 12:47
yeah, and these it works. I mean, they’ve been conducting about 3000 audits a year about this, and they’re collecting about a billion dollars over those audit. So I mean, clearly people are trying to cheat the system. They’re getting busted.
Jason Hartman 13:01
Yeah, don’t do it, folks. Just make it true. You don’t need to lie. Just make it true. I’m telling you, and I’ve said it for years. Make it a plan to get yourself out of these high tax business unfriendly jurisdictions. It may take time you do it over a few years. I remember for the longest time, I was just honestly kind of bored with living in Orange County. It’s a beautiful place. I love to visit. Look, we’re having our event there on Saturday. I’m a fan. I just don’t want to pay the taxes. I don’t want to pay the real estate prices. The home I bought here in Florida probably is better than my last couple of houses in Orange County, and it’s less expensive. So it’s just a matter of, you know, what really constitutes quality of life. And so that’s the thing. Hey, Adam, we better get to our client case study today with IRA. Let’s hear what he has to say. And we’ll continue this on another episode. Don’t forget
Adam 13:59
meet the master series coming up this weekend. If you can’t make it, there is a livestream option available. So go to Jason Hartman comm check that out, you should come to the event. But if you can’t, for some reason, one of the other, do get the live stream because it’s worth listening in and hearing everything.
Jason Hartman 14:15
Yeah, it’s not just listening. It’s watching to res video. So thank you for the reminder on that, Adam, you can join us from anywhere in the world, maybe even the International Space Station orbiting Earth on the livestream. But I can’t guarantee that your internet usage fees won’t be really high in the space station. So
Adam 14:33
but a small market, small market,
Jason Hartman 14:34
they’re small, small number of people affected but I just have to say that just in case. Okay, so Jason hartman.com slash masters live stream Tickets are available for those who are coming live, which is even better. We look forward to seeing you on Saturday.
Jason Hartman 14:57
Hey, I’m excited to bring to you a another client Case Study today and this is with our client, Ira Boyd. He has 13 properties. One is his own home and 12 our income properties. He lives in Southern California around Burbank. It’s just great to have him come on and share his story today. Ira. Thanks for coming on. How are you?
Ira Boyd 15:15
Jason? Thank you for having me on. I’m honored to be here.
Jason Hartman 15:19
Well, it’s good to have you. So first off, I guess I should ask you, when did you become interested in real estate investing?
Ira Boyd 15:25
Well, I bought my first property in 2004. And then and I knew nothing, I just had a little bit of extra money and I thought it was a really good idea. And I always knew that you know, real estate was a it always heard it was a pretty sound investment. I bought a couple more in 2007 and then got crushed in the ensuing crisis that occurred well
Jason Hartman 15:47
buying in 2004. Anybody would get hurt by that? Probably. Right. Those initial properties that you bought, kind of we’ll call it the first round IRA. Where did you buy those were those so CalPERS properties are those nationwide
Ira Boyd 16:02
one was in Austin which did okay during the downturn, but then I bought two in Salt Lake City and one of those was just like a really nice house I fell in love with it I made that mistake I fell in love with a big beautiful house and wasn’t it would have been fantastic to move into but it wasn’t a great rental and it took a dive
Jason Hartman 16:21
that’s the thing it’s almost better in some ways if you don’t see the property because then you’re forced to make a decision with your intellect not your emotions, right?
Ira Boyd 16:32
Yeah, I totally fell in love with it and it was just it was a bad call and what came out of that was fantastic though because I was really kind of filled with shame. Honestly, I was embarrassed that I made such a bad investment because over the next couple of years it just nosedive and I just couldn’t get out of it. But what happened out of that it turned into something good as as oftentimes tragedy you know, crisis out of crisis comes good things. Yeah.
Jason Hartman 16:55
It you know, crisis is an opportunity writing the dangerous wind like the Chinese say right?
Ira Boyd 17:00
Yeah, that’s right. And it did for me and I turned it into I started educating myself more I started reading all the books on real estate that I could get my hands on. And then I started listening to podcasts, which changed my life really for the better I think in in about 2014 I found you it was just a perfect fit I gotta say it just the show just resonated with me and I just took off I was one of those freaks that went back and listened to every single
Jason Hartman 17:26
episode. I love those people. I know
Ira Boyd 17:29
it’s we’re weird group but I listened to several of them. I listened to them for multiple times, you know, and just couldn’t get enough I was just eating it up. It was fantastic. And that led me to go to some of the events and I went to meet the Masters which for any of you listeners out there, that is the way to go. I mean, what happens is you get there, you’re in the room with other clients and it inspires you and you start to hear their stories and you see that it’s real and it takes it to the next level and then not to mention just the lineup of people in the room. You know the CPAs and lenders and the local market specialist it’s just a fantastic place to be to really take it to the next level it It gave me newfound energy. Yeah, that’s great IRA.
Jason Hartman 18:08
So first off, I want to say, Don’t feel bad look at millions of people. I mean, about what 12 million people went into some level of foreclosure during the Great Recession, right. Nobody knew that was going on, except the people in The Big Short Movie and the book.
Ira Boyd 18:26
Yeah, exactly. fantastic movie. And I know that now.
Jason Hartman 18:30
Yeah, yeah, yeah. But at the time, I know it’s hard. It’s hard. Definitely, definitely. But you know, the whole we’ll call it the debt industrial complex. It’s a big scam. It’s just a total scam. So don’t feel bad about that. But you got through the Great Recession. You found my podcast, and you said 2014, I think right. Yeah, that’s correct. When did you come to your first meet the masters of that very next year? Oh, 2015. Okay. Do you remember I’m getting curious. Do you remember what your first episode was? Where you listen to our podcast?
Ira Boyd 18:57
No, I don’t because I you know, the Right when I got ahold of it like I said, I just started spooning it up and I just listened to tons of them and then yeah, I went to that you know I went to the meet the masters and it was fantastic you know I became a bag man with Aaron yeah
Jason Hartman 19:12
him in his funny is funny bag that’s an inside joke if you weren’t there or you haven’t been to other meet the Masters where I did that when steward explained
Ira Boyd 19:21
Yeah, other than to say you had a bag filled with like a razor blade and some whiskey and a condom. So okay,
Jason Hartman 19:26
yeah. larious Yeah, it was hilarious. But I don’t think most people get that so when when did you buy your first property through our network?
Ira Boyd 19:36
It was pretty soon right after that because I was on board once listening to the podcast for long enough took me to the event and once you get there for me, that’s when I got traction. Meeting the other people inspired me talking to the investment counselors personally you know, I got into dealing with Sarah on a personal level and when you know and also at the events you’re having the evening with people you might have dinner you might have a few drinks and that takes it to the next level because your personal with them now now you there’s a level of trust that you didn’t have before. And once that happened I was in and so I think I bought a property right away, waited for a little while it felt good that weren’t any real problems knock on wood. And so I just started accumulating them and it’s been pretty damn good ever since. Yeah.
Jason Hartman 20:23
That’s so great to hear. And so now you’re up to 12 income properties, and what different markets are you in across the country?
Ira Boyd 20:30
I kept one in Austin. I had actually bought one other one in Austin prior to getting tied into you. And since then, I bought eight in Memphis, and one in Indianapolis.
Jason Hartman 20:43
Okay, fantastic. Good. Good. I think you’re missing one in that count. Yeah, that would be 11. So where’s that other one? Myself,
Ira Boyd 20:55
I kept one of my other properties that I told you about. Oh, okay, got ya. Got ya. Good stuff. Good. stuff.
Jason Hartman 21:00
So you’re mostly Memphis in Indianapolis now? What’s your plan for the future? I think you might be over invested in Memphis, although that’s a great market. I own four properties there myself. Are you going to do more Indianapolis or some other markets? What do you think? Well,
Ira Boyd 21:15
it’s funny you say that because I all the initial ones with you I did in Memphis because I really, I just really liked this local market specialist that I met at one of the events, and I just kept going back to him, we built a good rapport and I had such good success with them that I went back. That’s what I on your advice. I kind of wanted to start diversifying more. And that’s when I bought the Indianapolis property. But most recently, I took my family on a little Southern trip was really fun over the holidays. We landed in Memphis and we rented a car, looked at some properties in Memphis, and then we went down to Jackson, Mississippi, looked at some properties there. Yeah, my intention was to buy in Jackson, but it just didn’t. It didn’t fit that just didn’t.
Jason Hartman 21:56
Yeah, you know, that’s why there are choices. I mean, different markets and It’s not just the market, it’s really more the team, the provider, I think I, I think you should choose the provider, the local market specialist in the team first and the property second. Sorry, agree with you more, even if the local market specialist is a good choice at first, they don’t always remain a good choice forever. That’s one of the biggest problems with our business. I think they fluctuate, right and a fragmentation of it. But what are some of the you know, like lessons you’ve learned or advice you want to share with other investors? I think that’s one of the best things that comes out of these client case studies we do on the show.
Ira Boyd 22:34
I mean, I could go in tons of different directions with that. I like to call myself a working stiff by day and an investor by night. Yeah, that’s great. You know, by the way, we should say you’re in the entertainment industry. You live in Burbank. So the movie industry is you know, you’re right there, right. Yes. What I’d like to do what I’m trying to do, what a lot of people are trying to do is turn my w two money into legacy money. And you know, it’s going well so far. I think my advice to people is, really, I would say, show up at one of the events, it might be one of the most important things at least it was for me, like that really inspires me. That’s when I’m in the room with like minded people. It’s a powerful thing. And it just motivates you to act.
Jason Hartman 23:10
Yeah, I listen, I want to expand on that thought for listeners, folks, you got to get out of the theory stage. You know, it’s great to be listening to podcast, you know, read books, whatever, get your education, that’s certainly important. But you got to go meet people. And I’ll tell you what I discovered this IRA. It’s just like you’re saying, When I joined I, you know, I used to just be running my business and keeping my head down and doing that. But when I joined young entrepreneurs organization, my first sort of mastermind group, if you will, and I saw other people in my peer group that were doing, like much bigger things that I even imagined I could do. I thought, wow, you know, what you realize by, you know, hanging out at the bar and having a drink with him or going to dinner with him, just like you said, you know, it’s not what takes place at the conference. Like that’s one thing, you know, sure, it’s great to hear the speakers and learn things. But when you hang out and maybe share a meal with just real regular people, I don’t know, at least for me, the way I describe it is what clicked, I think, in my mind is that I used to, it used to be sort of, like, live there were those people and there was me, right? And then I realized that, hey, this guy isn’t, you know, he’s doing way bigger things than I am. But he’s not some white great person or anything, I could do that too. You know, he’s a great person. And, and I’m just a regular person, you know, like, I could do that. Do it, like makes it real, you know, there’s a difference. And that’s the power of the mastermind group, you know, conferences, everything like that. Yeah.
Ira Boyd 24:41
If I can expand on that a little bit when I went to the event what it was that like, there’s people in the room that have hundreds of houses, but then there was somebody sitting next to me that had two houses, right, right. levels. Yeah, yeah, exactly. discuss his situation where he invested who his property managers were is it working. Were there any issues and that’s what makes it really real. And I’ve made contacts there that I still, you know, talk to now, which is great. Yeah, that’s, that’s a great networking tool as well.
Jason Hartman 25:08
Yeah. So you can you have someone you can just bounce ideas off with, yeah, kind of get a partner. You know, it’s one thing I want to encourage people to do is use those networking, you know, other clients of ours that you meet at our events, have an accountability partner to you know, help you stick to your goals. And hey, Ira, did you know six months have passed? Did you buy another property yet? You know,
Ira Boyd 25:29
yeah, it’s so true. You keep each other motivated. By the way, you know, I have named your program I call it the Jason induce debt destruction. That’s my boy. I love it.
Jason Hartman 25:41
So for those of you who don’t know, what I was referring to, is my concept of inflation into step destruction, which is used debt in a powerful way. And inflation basically pays it out. Your tenant pays off for you, but so does inflation, right? And so this is the Jason induced debt destruction. I’ll take it. Thank you. I love it. That’s great. That’s awesome. Hilarious. So going to conferences, masterminding with people, that kind of stuff, that’s great advice. I definitely recommend it. Any other learnings like you know how to deal with your property managers? Or are there any tools or technology or apps you’re using or anything like that,
Ira Boyd 26:18
you know, I’m really not right now, I may get to the point where I self manage more. I know you talk about a lot on your podcasts, and I listen with intent as in my future, I would like that to be me, honestly, that’s what I’m kind of working towards. But I’m years away from that I’m in that, you know, I’m just in my career, and I like it. And I’m going to stay there for a number of years. But when at the end of that I would like to transition into more of a real estate focus, you know, yeah, yes, I would just like to take advantage of the tax write off to be as a real estate specialist, your real estate professional designation,
Jason Hartman 26:52
and thank you, and again, that doesn’t mean you go out and sell real estate. It just melts. It’s an IRS classification that will allows you some fantastic tax benefits. And you know, I roll with 12 income properties. If you weren’t doing the full time working stiff job in the entertainment industry, you could probably qualify or at least be close to qualify. I’m
Ira Boyd 27:13
getting closer, Jason. Hey, you’ll be there. You’ll be the first one to know. That’s awesome. Good. Good
Jason Hartman 27:19
job. Good job. So what’s your plan with your portfolio? I think I asked you that. But I don’t know if I like the answer. Like, yeah,
Ira Boyd 27:24
I’m glad you asked me that because I’m really looking forward to the next meet the Masters because I want to do a portfolio makeover. I’d like to get in somebody’s here and talk about I have a few properties that have a lot of equity in them. And one I own free and clear that I know that I want to do a 1031. So I’m sort of just waiting right now to actually get there and talk to people in person. And I’m gonna take action this year. I’m super excited about it. That’s what I want to do. That’s great.
Jason Hartman 27:49
Yeah, the great thing about the 1031 exchanges, of course itself that you get, you know, tax deferred exchange, it’s not tax free because someday if you liquidate you’ll have to pay the tax. But you also get to refinance in the process. And so you can 1031 exchange and refi till you die at the same time, which is a great plan.
Ira Boyd 28:10
It’s a pretty sweet deal.
Jason Hartman 28:12
It is a pretty sweet deal are using like property tracker to track your properties or anything or just using an Excel spreadsheet or what what are you doing there? I’m honestly doing a kind
Ira Boyd 28:19
of old school and getting to the point where I need to take it to the next level. But you know, the acquisition of all these properties happened over the last four years primarily. So I’m still I mean, I’ve have a big huge drawer here filled with all the stuff and I constantly just check all my books and go through it. Twice a month, I’ll cross reference everything and kind of just go through and make sure that it’s going smooth, make some emails and whatnot, take care of any issues. They’re usually small so far, but that’s it and I yeah, I do need to take it to the next level probably. Right. Right. So I I know it varies from month to month, but if you had to average it out, you’ve got the 12 rental properties. How long does it take you every month, you know Do everything involved with owning and managing those properties, right? Like, is it you know, half hour per property like D spent six hours a month, 12 hours a month? Or less or more What? Gosh, it It varies. But I would say I mean, if I wanted to, I like it a lot. So I spend more time on it than I actually need to, but it’s still it’s probably 68 hours a month max. Yeah, I can do less if I but I, you know, I just think it’s really good for you to stay involved. So that, like, I’d like to send out emails to my property managers, just to let them know that I’m paying attention. Even if there’s even if there’s no problem that is going on. I like to just go like, hey, everything okay, how you doing? Even if it’s just meaningless, small talk. It’s really just to let them know that I’m paying attention. I think it’s
Jason Hartman 29:44
helpful. I think that’s very helpful. They know that you are an aware engaged owner. So yeah, that’s that’s really good advice. Just about a half hour property. And you say you could spend less if you want to, you’re just not trying to be like super efficient with a portfolio. So that’s a good question. You know, a lot of people say, Well, how long does it take now? Have you had any repairs that you’ve liked negotiated down or any learnings from that, that, you know, you can share with investors?
Ira Boyd 30:12
You know, I had a problem with an air conditioner. And really, that’s kind of what you always talk about on the podcast that inspired me to ask more questions. And I think I had it off at the past because even though it wasn’t a real problem, what I did is the minute that they sent me an email saying that there was a problem, maybe a lot of people wouldn’t even respond to that. And they would just do the service, right? But instead, I engage with them good. And so I don’t know that it would have gone bad or anything. I just didn’t allow it to go back. Right, just right away. I was like, Okay, let’s get some bids. And you know, it’s just so engaged that I just think they’re like, Okay, cool. We’re going to take care of this professionally and rightfully, and we’re not going to mess around with it and they’ve been pretty good about it. Good. Well, that’s that’s really good. You know, the old saying an ounce of prevention is worth a pound of cure. Right
Jason Hartman 30:59
there. Good advice. Very good. Well, Ira, thank you for sharing your story. That’s just awesome. I love it. One last question I want to ask you about is rent increases. Now you’ve been five years. Well, not quite five years in the game, at least with us. You did it before you found us too. Are you increasing your rents? are you pushing those up over time? Is that
Ira Boyd 31:20
happening or not? Really? To be honest, not at all. I’m very hesitant of that. I’m more like, leave well enough alone as far as that goes. And, you know, I’ve listened to you talk about it and taking that into consideration, but I really like the idea of keeping tenants longer, instead of threatening to push them out in any way. I almost just like to
Jason Hartman 31:40
not rock the boat. Don’t be too hesitant to raise rents, though, you gotta you know, I would say even if your rent increases are smaller, do them so that you get people in the habit of them. I’m gonna bug you about that one. Okay, I’ll bet you to raise your rents. I mean, you can. tenants are used to rent increases. They’re used to everybody’s used to inflation. They just expect it, you know, even if it’s not three or 4% per year, you know, it’s 2%. I mean, on $1,000 property, that’s 20 bucks. No one’s moving for 20 bucks.
Ira Boyd 32:10
Okay, no doubt, but let me back up a little bit. But the truth the matter is, is that the property managers take care of that a lot anyways, okay, so so it’s not like you’re not raising them? No,
Jason Hartman 32:19
right? You’re not pushing it.
Ira Boyd 32:21
Yeah, I’m just not pushing it, because most of the time, it’s already wrapped into the deal. You know, they there’s rent increases that have come along. There’s, it’s just happening a lot out there, which is great for all of us investors. And I think the property managers are in tune with that so that it’s happening more often. And even when there’s turnover, the next tenant is actually paying at a slightly higher rate. So it’s priced into the new rent into the new rent. Okay, good.
Jason Hartman 32:45
Glad to hear that. How long are your tenants staying? Are you finding that they’re staying more than a year to time or is it kind of a, you know, we perform an 8% vacancy every year so one month per year, essentially right? But are you finding That it’s better or worse than that,
Ira Boyd 33:01
I would say that’s probably a pretty good number. I will say that most of my tenants sign two year leases right out of the gate, good, good, bad, changes it a bit and you know, probably helps. And I won’t maybe even see some of those problems until years down the line to be realistic about it. But right now, I would say I’m on the better end of that.
Jason Hartman 33:21
Good. Good to hear. That’s awesome. That’s awesome. What’s the average cash flow from your properties? Are you getting, you know, a couple hundred bucks a month per property? I mean, it depends depends on the financing. And you know, it’s complicated, but
Ira Boyd 33:32
no, but that’s what I always strive for is about 200 to $250 per property,
Jason Hartman 33:36
good stuff, and what kind of properties Do you like to buy? Do you like the nicer properties or you know, class like a, b or c as we talked about?
Ira Boyd 33:45
I love the you asked me that. I mean, first of all, what I will tell you that it has changed over the years like the first houses, you know, I just wanted a big beautiful house and then I realized for one what i what i like I actually like single level homes. For just for Right. Even less square footage is becoming more attractive. I like nice houses for sure. It’s still very important to me. If I could have my choice, I’d kind of be that guy who just invested in a properties only but to be honest, it’s more like a and b but I always try to go for the best houses that I can. But I like them simplified. I don’t like carpet. It’s kind of all the things that you’ve been preaching.
Jason Hartman 34:22
Yeah, like yeah, floors, make your property bulletproof. You know, and you know, you don’t have to do this right away just whenever there’s a tenant turnover, and you gotta replace carpeting, pay a few extra bucks. It’s really not much it’ll pay off in the long run, and get yourself the vinyl plank floors or some hard surface flooring. And yeah, you can do it throughout the house. I actually prefer it like in my new house, I have hard flooring everywhere except the bedrooms. And people say you know, put the carpet in the veterans. I really would prefer the hard flooring in the veterans to
Ira Boyd 34:53
me too. I think it’s a beautiful look for what
Jason Hartman 34:55
it is and it’s just so much more durable and you know, I have a dog and if my dog gets sick throws up. You know, it’s still like I don’t need to just wipe it off. It’s easy
Ira Boyd 35:05
to my house to let me tell you this that on that trip that I described to you earlier, in Memphis, I bought a house while I was there. Yeah. And I really didn’t intend to I was on one of our property tours. No, just on this trip that I was telling you in the over the holidays. I took my family. Got it. Got it. Yeah. And while we were there, we saw the perfect style house. You just asked the question, you know, like, what kind of house do I like to invest in? It was in one of the best places in Memphis, one of the best neighborhoods. They had a brand new roof on it, they redid the floors. It had a new hbic and a new water heater. It’s just it’s bulletproof. You know, it was single level. small square footage was everything that I like.
Jason Hartman 35:42
Yeah, that’s great. That’s great. Good, good stuff. Yeah. You know, doesn’t this become a little bit of like a collector’s edition. I you know, I just love collecting these little houses, you
Ira Boyd 35:54
know? pastic it’s, it’s right up my alley, and I’m really enjoying it. I’m looking forward to The future. Yeah,
Jason Hartman 36:01
good for you. Well, I again, thank you so much for sharing your story. You know, everybody loves these client case studies when our clients come on the show. So we really appreciate it and the listeners appreciate it even more than we do. So thank you so much. And I will see you in about 10 days at meet the masters. Jason, thank you so much for having me. It’s an honor and, you know, continued success to you, my friend, thank you.
Ira Boyd 36:23
Join us March 23, and 24th for the 2019 meet the masters of income property.
Ira Boyd 36:29
Let’s break this down and look at some of the strengths of income property. As an asset class, I found that this event is really helpful because I am totally a newbie to real estate investment. And so I picked up so much information. One of the great things about it is that it’s so fragmented, right? embrace the fragmentation.
Jason Hartman 36:52
We’ve actually been learning a lot about the tax benefits to real estate and a lot of I’ve been investing actually well over 10 years. years now, and I learned a lot of new things today. The other advantage of this weekend is networking. Meeting new property managers meeting new area specialists and seeing the product they have to offer that changes here by you. Register now with Jason hartman.com slash masters. Thank you so much for listening. Please be sure to subscribe so that you don’t miss any episodes. Be sure to check out the show’s specific website and our general website Hartman. Mediacom for appropriate disclaimers and Terms of Service. Remember that guest opinions are their own. And if you require specific legal or tax advice, or advice and any other specialized area, please consult an appropriate professional. And we also very much appreciate you reviewing the show. Please go to iTunes or Stitcher Radio or whatever platform you’re using and write a review for the show we would very much appreciate that. And be sure to make it official and subscribe. So you do not miss any episodes. We look forward to seeing you on the next episode.
This Flash Back Friday show was originally published in March 2017 as episode 876. Jason chats with Investment Counselor Sara about the impact of Hurrican Harvey in Houston. While it was one of the worst natural disasters in recent history it also provides a great opportunity for rebuilding. The price of commodities increase so this will impact the area’s real estate prices.
Jason Hartman 0:00
Welcome to this week’s edition of flashback Friday, your opportunity to get some good review by listening to episodes from the past that Jason is hand picked to help you today in the present, and propel you into the future. Enjoy.
Announcer 0:15
Welcome to the creating wealth show with Jason Hartman. You’re about to learn a new slant on investing some exciting techniques and fresh new approaches to the world’s most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine self made multi millionaire who’s actually been there and done it. He’s a successful investor, lender, developer and entrepreneur who’s owned properties in 11 states had hundreds of tenants and been involved in thousands of real estate transactions. This program will help you follow in Jason’s footsteps on the road to your financial independence day. You really can do it on now. Here’s your host Jason Hartman with the complete solution for real estate investors.
Jason Hartman 1:06
Welcome to the creating wealth show. This is episode number 876 876. This is your host, Jason Hartman, thank you so much for joining me today. I have got Sarah, our lead investment counselor here who’s been with me the longest to do this show with me today. Sarah, how are you?
Sara 1:22
Hey, Jason. Good. Thanks for having me back.
Jason Hartman 1:25
Looks like your son. Jordan had his first day of sixth grade today. How exciting.
Sara 1:31
Yes. Didn’t he look great? Yeah, I
Jason Hartman 1:33
saw him on Facebook. He looked good. He looked good. First thing I want to talk about Sarah today is the absolute tragic chain of events that is unfolding in Houston with this flooding. I mean, it’s just it’s just so heartbreaking to see those pictures on TV and the news and the videos. I cannot believe that I feel so bad. I donated to a couple of the Houston recovery charities yesterday. And it’s just terrible. You know, we’ve done a lot of business in Houston over the years, and many people have reached out to me since the flooding unfolded there and asked me, you know, people are being disaster capitalists. Which, by the way, I want to mention I think was Naomi Klein. I read her book called disaster capitalism many years ago, and I don’t think that’s a bad thing, even though I’m kind of laughing about a little bit because whenever there’s a disaster, you know, these people the opportunists jump in and, and go and think how can I make money off that right? And the stock market reacts and, you know, the whole economy reacts to this type of stuff. And that is not a bad thing. That is a good thing, because all of the disaster capitalists, okay, and I admit there are people who are crooks and bad people to take advantage of situations, but for the ones who don’t, they are providing needed services for safety and recovery. And, you know, all the things people need without capitalism, specifically disaster capitalism, who would be there to provide it the lousy government? I mean, look at the tragic job they’ve done. Look at that terrible job they did during Katrina and New Orleans and the other areas that were affected. I mean, it was pathetic. And I, you know, I’m being an armchair quarterback. I don’t know enough about it yet. But it seems like the government’s response here is pretty pathetic. Again, not only is the response pathetic, but the fact that they even allow this to happen in the first place. And what I mean is going back to the urban planning and the flood control, and, you know, all of the systems involved in water management in Houston, just not acceptable. So we’re going to dive into this topic a little bit today. But first off, I want to express just my deep concern. And Sarah, I know, you feel the same way. It’s just a terrible, terrible situation in Houston and hopefully, the recovery will be swift.
Sara 4:01
Yeah, I mean, it’s just really heartbreaking. I’ve been totally glued to the TV and my Facebook feed. You know, I have a friend I went to high school with that has been posting live video of the flooding. And ironically, she lives where I own a property in in Katy, Texas, which is pretty far inland. I mean, I’ve had that property for 10 years, I’ve been through hurricane before with, you know, very little damage. But I really think that this storm was even bigger than anybody really expected. I mean, I know there was warning, and I know they said it was going to be the biggest storm ever, but it just, you know, it happened quickly. And I think they’re still storming out there. I mean, it’s really too early to tell the magnitude of this thing and the devastation, but I completely agree with you that there’s going to be a huge need for help, you know, in housing and several different areas and so we’re going to need You know, people, you know, these capitalists to come in and make that happen. So I completely agree with you there.
Jason Hartman 5:06
Everybody will criticize the disaster capitalists, but without them, you know, there there wouldn’t be any help. So let’s talk a little bit about, you know, what we’ve learned from prior disasters. And what we saw happen and in Katrina is is certainly the best example. Because the first Well, I don’t want to say the first that this is not an order, but just some of the things that happen are number one, we will likely see, obviously, a lot of litigation, okay. There will be a lot of insurance, bad faith litigation, people suing their insurance companies saying that they didn’t provide enough coverage and many times they’re right, I mean, insurance companies, they they try to weasel a lot of times and not pay claims or not pay as much as they should pay. So there will be a lot of litigation there. Of course, there will probably be a call for and probably be an actual more toryism on mortgage payments. When we saw this during Katrina, where many of the lenders did a six month moratorium and said people don’t have to pay their mortgage for six months. And guess who benefited most from that and who got hurt the most from that? Well, the people that had that had equity in their properties didn’t get any benefit from that. Because, you know, if you if you don’t have a mortgage, how can you get a benefit from a moratorium, right? So so that’s the first thing that happened, the people with the debt, they got the benefits. So again, as I always say, the best insurance is a high loan balance. And when you go back to that other topic I brought up of the insurance, bad faith litigation and all the lawsuits that will undoubtedly come out of this. If people have a lot of equity in their property. And if people own their property free and clear, meaning they have 100% equity. Well, they’ve got to go hire the lawyers. themselves and fight with the insurance companies themselves. But in some cases, when they have a high loan balance, the lender will go to bat for them and sometimes the lender doesn’t even formally go to bat for them, but the insurance company just knows that there is a lender and a high loan balance and, you know, if, if the disgusting criminals at Wells Fargo, for example, just like to pick on Wells Fargo, because they’ve had so many scandals recently, I mean, just pathetic, disgusting company. I hate Wells Fargo Have I told you that lately. They they you know, a lot of times the insurance company will be more likely to be on better behavior and pay claims more quickly and more completely, if you will, when there is a lender involved. So again, going back to my very old saying the best insurance is a high loan balance. Okay, after that as your insurance policy. The first thing is a high loan balance. With your lender. So we’re going to see that we’re probably going to see a moratorium and payments, we’re going to see FEMA or some federal agency and maybe state agencies as well come in and offer disaster relief assistance. I’m sure President Trump is visiting, I believe, today, if I’m not mistaken, some of the hard hit areas. So we’ll see, you know, low interest loans will see various government aid and so forth, offered as well as the government, you know, usually creates the problem in the first place, and then acts like the hero when they come in and solve the problem that many times they created or had some hand and creating in the first place. But that’s just the way our system works, what we might see in the future, but you know, I wouldn’t bank on this because nobody knows, is we might see some sort of tax incentive for rebuilding. We saw this in something years ago. And Sarah, you know, because you’ve been with me for what, almost 10 years now, right? Yep, yep. And that was the go zone. Remember the go zone zero?
Sara 9:01
I do. In fact, when I bought my property in Houston, it was supposed to have been a go zone property and then
Jason Hartman 9:09
read about that
Sara 9:10
some debate about the, you know, certain zip codes and things like that. And so I don’t think I ever actually took that deduction, but a lot of our clients did. And so, you know, I have to imagine that they’re going to have to do something like that to rebuild this, this huge community. You know, one of the statistics that I heard and you know, in fact check this, but I heard that only 15% of homeowners have flood insurance. And I was personally advised not to get flood insurance and it wasn’t required by my lender. And so I think that’s going to have a huge impact on the devastation and and the rebuilding of the community because I have a feeling we’re going to see that a lot of people were not insured for flood.
Jason Hartman 9:57
So yeah, when you talk about things like flooding insurance in earthquake insurance. This is a problem because, as opposed to something like a natural disaster, like a tornado, for example, or, you know, maybe it’s not a natural disaster, but a fire, right? Those only affect a small number of homes usually, or maybe just one home, you know, tornadoes can be very surgical. Whereas a hurricane is broad, an earthquake is broad. So, you know, if if the big key Well, it’s not if but when, when the big California Earthquake comes, even if people have earthquake insurance, you know, there may not be coverage and coverage may be very limited because it can’t all be paid. And, you know, the the state is involved in those things. And, you know, as in the in the golf areas that were after Katrina, but you know, even states don’t have unlimited budgets, even countries, as we know don’t have unlimited budgets. We talked about that quite a bit on the show. Certainly insurance companies don’t have unlimited budgets, the likelihood that claims can even be paid is a whole big question. So we’ll probably see a variety of things come out of this but a lot of the people that reached out to me directly were probably thinking well, you know, maybe I’ll I’ll go in and and try to pick up a deal you know, buy properties on the cheap in the in Houston, for example, and rehab them I mean, they don’t need extensive rehab Of course, water is a really tough kind of damaged to deal with. So there are those types of opportunities but for our clients, those are too complicated and too involved and too hands on. Our clients aren’t into that type of thing. You know, another one of our clients talked about he should get into the business of providing construction materials like sheet rock and you know, that’s the old idea of the gold miners instead of you know, mining for gold or panning for gold, you know, just sell Levi’s and pics and axes, you know, provide the infrastructure Rather than the than the actual, you know, doing the things sometimes that’s the Better Business, right? So there are all kinds of things that will happen out of this tragedy. And we don’t even know what they are yet. We’re just speculating on some of them, some of them are pretty obvious that they will happen. We’ll just see how it unfolds. It’s going to take a long time to rebuild. This is a huge, huge tragedy. I mean, the amount of money and damage is just mind boggling. It really is. Sarah, do you have any other thoughts or comments or things you want to discuss about it?
Sara 12:35
I mean, from an investment standpoint, what would you suggest for somebody who already say owns a property there? Let’s say they had significant flood damage, you know, thousands and thousands of dollars, and they didn’t have flood insurance. You know, would that person continue to pay their mortgage? I mean, assuming the tenant can’t live there, so there’s no income. You know, what would an investor do in that kind of situation?
Jason Hartman 13:00
Well, also, that’s a good point you just brought up kind of as a tangential point is, you know, do they have does their insurance policy cover for loss of rent, some, some policies have that. And it you know, won’t be complete coverage, but it will provide something. But I would say it’s too early to tell. Just wait, you know, a week or two weeks, you’re going to start hearing about moratoriums on mortgage payments and things like that. I’ll just bet you that’s that’s coming. Sorry about the noise, my housekeeper’s in the background here. If you can hear that. So that’s probably coming. So just it’s just too early to tell. So just sit tight, when we hear read about this stuff will certainly talk about on the show, your lenders will notify you directly if you were affected and your properties were affected. So it’s just too early to tell. But yeah, I would say that’s a high high likelihood that there is going to be a moratorium and mortgage payments. So if you followed my plan and you you used to leverage prudently and you tried to maximize your borrowing capacity, that unused asset of credit. And by the way, a small tangent here, one of our listeners was talking about and posting on Facebook about how high her credit score was. And I chimed in right back to her and I said, your credit score is too high, that means you’re not using Enough of your credit, your utilization isn’t high enough. Remember, when people look at their assets on a balance sheet, and you know, you look at a balance sheet has two columns, right assets and liabilities. And people put what things they own, and what liabilities they have against them, what loans they have against them and so forth. And in so doing, you know, they never consider their ability to borrow their credit score as an asset and they should, if you’ve got a really high credit score, that is not a good thing. Once You get over 720 or even 740. It’s irrelevant. Your credit score is fantastic. You know, if you have a credit score, that’s 800, you know, you’re not using your credit enough, folks, you got to use it more. So try to borrow more money. Now, that doesn’t mean get a bunch of stupid consumer debt, that means get more investment grade debt against good quality, rental properties. The other thing and I alluded to this in the beginning of our talk today, Sarah, but I didn’t really touch on the point I don’t think is commodity prices. Whenever you see natural disasters like this, you see commodity prices go up. So the cost of labor, the cost of gasoline and oil, you know, this third, the big part of the refining capacity of the country is in golf. Okay. So we’re probably going to see an increase in those prices. We’re going to see an increase in prices of all of these construction materials. Everything from sheet rock and Congress Create a lumber to copper wire to blast steel, I mean, just every construction material will become more expensive and labor will become more expensive. And there will be a lot of workers moving into the impacted areas. Okay. People will move from surrounding areas into Houston and the other affected areas in Louisiana to do construction and provide services and provide labor and insurance adjusters will move there. You know, I mean, this is, you know, in a way I hate to say it, but it’s an economic boom, okay. Now, this isn’t the kind of economic boom you want because it’s more like war. Okay. War destroys things, but they also say war stimulates the economy. Well, the biggest public works project of all time was World War Two, you know, and many say that’s what got us out of the Great Depression, World War Two. But you know, it’s not the kind of economic boom you want necessarily, right? But it is Is it is it is it boom? Nope, no question about it either way,
Sara 17:03
quick question there. So when you say that the commodities prices will go up, are you referring to just locally in Texas or nationwide globally,
Jason Hartman 17:16
globally, globally, because these these construction materials are traded globally. So, man, they are not indexed to any one currency, which is a wonderful thing, you know, that they’re not tied to the dollar or the yen, or the Euro, or any any one thing. They are, they are a global commodity, they are money, they have intrinsic value. So, so that’s a that’s a really, that’s a really good thing from an investor standpoint,
Sara 17:48
right. So assuming, assuming that’s true, and all of those commodities do go up in price, you know, and it’s a catch to the global market, then we could see real estate prices go up because it’s going to increase The cost to build new properties everywhere. So we see now the cost of real estate go up in several markets.
Jason Hartman 18:08
Absolutely, that is a indirect impact, because this will cause construction prices to increase. So, you know, all of these things, you know, you don’t need to be affected. And and by the way, I want to talk about one more thing that I saw happened in Katrina, sometimes in just a moment about insurance claims and so forth. But yeah, you don’t need to be directly impacted from this because when commodity prices go up, it basically increases the value of your property anywhere, okay, especially closer to the incident itself, but globally, because, again, you know, lumber and concrete and all of these materials, copper, they’re traded globally, they’re not tied to any one currency. Talk about one other thing here. And that is something that I think happened during the Katrina disaster. And that is insurance claims. Okay. So sometimes people look at this tragedy and you know, I used to talk about how the Chinese symbol for crisis is the same as opportunity. And literally translated that symbol means crisis is an opportunity writing the dangerous when writing the dangerous wind. And we all have had and you know, when you’re younger, it’s hard to understand this. But when you grow up a bit, and you’ve had a lot of experiences in life from which to draw, you know, that a lot of things can seem really, really negative. Really bad things happen in your life. And you think, Oh, my God, this is the end of the world. Right? But, you know, it’s like, the author Richard Bach said, you know, what, what the caterpillar calls the end of the world, everybody else calls a butterfly, okay? So it depends. how you look at it and if you just wait long enough, a lot of times, things can turn out really, really positively. So let me give you some examples. And this happened to one of our clients in Katrina. Okay. His property was completely destroyed, completely destroyed by the storm surge. Okay. I mean, just wiped, it was gone. And you know, this client, Sarah, you remember him, okay. And I won’t mention his name right now, but it was completely destroyed. And, you know, this is a way of actually renewing and rebuilding. So a condo developer came along and wanted to do an assemblage and buy up some lots in this area. And it turns out the property as a vacant lot post disaster was worth a lot more money than the than the home itself. Okay. So, so it’s interesting how that works, and sometimes the insurance claim now I’ve talked about insurance, bad faith and how sometimes insurance companies don’t like to pay claims, but it’s Does the insurance claim will actually overpay, and you can get the construction done for less than you receive from the insurance company? So, a lot of times these things work out a lot better than we think at the time.
Sara 21:12
Yeah. I mean, I can’t recall which client you’re talking about. You have to tell me later.
Sara 21:19
But we’ve seen this over the years with, you know, other types of insurance claims as well. You know, where did they get a lump sum jack and worked out better, you know, so, yeah, I guess we’ll kind of have to just wait and see. I mean, for all I know, it’s, I think it’s still raining in Houston. And Sir, you know, we have to let the storm work its way through and, you know, then take it a day at a time and, you know, I just, I feel so bad for these people that are, you know, actually occupying the homes and, you know, people that are still stranded. So, there’s still going to be a lot of, you know, relief efforts out there.
Jason Hartman 21:59
You heard this unboxer yesterday when Brittany had chimed in on one of our threads there, she said that one of her friends that lives in Houston just moved there three weeks ago, can you imagine? And they’re their house is full of water. There are literally fish swimming in their living room. Yep. Oh my god, I can’t even imagine. It’s just terrible. But um, hey, Sarah, let’s wrap this one up. But do you want to just grab one quick listener question from our AirPods contest. We’re trying to work our way through some of these questions. And maybe we’ll just grab one of them real quick before we wrap up. So Sarah, you can pick
Sara 22:38
Yeah. Okay. Let’s do we’ve got Laura. And her comment actually was I love the tangents.
Jason Hartman 22:46
Well, thank you, Laura. I will I will keep going with the tangents. I always go off on tangents.
Sara 22:51
Yeah, so I’ll read the question here and then you can answer. Hi, Jason, could you please discuss some specifics of how your own single family portfolio Perform during the Great Recession? Did your rental rates go up or down? Did you have more tenant turns? Did class a property tenants move to class B, and C properties? And the last question, did you see any more in one marketplace versus the other?
Jason Hartman 23:18
Oh, gosh, you had to pick such a long question right? For this, because I know you’ve got to go and so two eyes here I’ve got a record another recording coming up. But I’ll try to answer that one is to simply as possible Laura. So first of all, at first and now you know, we’re talking 10 years ago basically now right? So this has been a while but the nice thing is you can go and listen to my past episodes of the podcast that I was doing way back then and you can hear what I was saying you know, like right from that actual experience them but um, what I noticed happened is that it first the rents strengthened on my own properties. My clients properties, and the tenants stayed longer. And that was good. And then what I noticed happened as the stupid government got involved. And we had we, you know, we had an election year in 2008, obviously, right. So the the politically correct, idiotic thing to say was let’s keep everybody in their home. Now, of course, the question on answered from that was, what home should they be in, in other words, was the school teacher who was making, you know, $58,000 a year in that $800,000 home that they got with a subprime loan that they never should have received that loan anyway, in the first place? Should they be staying in their home? And so the government shoved every you know, down everybody’s throat, the loan modifications and the workouts and the bailouts and, you know, millions of people stop paying their mortgage and you know, that’s going to happen in Houston. A little Louisiana to just wait. And, and so that really perverted the market. The market forces couldn’t do what they should have done, okay, because what they should have done, which I teach about in the three dimensions of real estate, and they started to do but then they ultimately didn’t it didn’t continue is when the housing market, meaning the sales market falters, and it slows as long as the population is increasing, which it kept increasing through the Great Recession. The rental market should strengthen and rent should be there should be a lot of upward pressure on rents, and people will stay longer in the rental property. And that didn’t start to happen. I noticed it at the beginning of the Great Recession. But then as we moved into it, and the government kept telling the banks to bail everybody out. And you know, of course, there were three Big bailout multi trillion dollar bailout programs that we taxpayers paid for, as they did that the market forces couldn’t do their thing. And so there really wasn’t as much increase and upward pressure on rents, as we should have seen. So again, to answer that question, it started to happen at the beginning, and then it kind of just petered out and sort of stabilized through the Great Recession. Really, if you think about it, for investors, it was only a couple of really dark years there. Because people started coming back into the market, you know, reasonably significantly. I mean, Sarah in 2010, you know, I started to see business really pick up and those were the people that made all the money. I mean, you know, they they just did really well, because they obviously bought when, you know, when there was a lot of fear, right.
Sara 26:48
I was just thinking, you know, that ties right into this whole Houston discussion. It’s like it when it’s happening. I remember when that first started happening in 2008. I mean, it seemed like The world was falling apart. It was really dark and gloomy and people were scared. And it was bad for a couple of years. But you’re right. 2010 it just picked right up. And we haven’t looked back since. And, yeah, the buyers in 2010 2011, you know, they made out, like, just beautifully. You know, so maybe a little inspiration for anybody having, you know, challenges in Houston is that, you know, it’s going to probably seem heavy for a little while, but you know, it will, it will work out good stuff.
Jason Hartman 27:35
So anyway, I know we’ve got to wrap it up. I think that kind of answers that question, Laura. I know your questions, a little more in depth than that, but we’ve got to run. So we will, you know, maybe touch on that a little bit more on a future episode. Okay. Sarah, thank you for joining me today. And our thoughts and prayers are with everybody in Houston. You know, please listeners if if you find it in your ability, you know, figure out out the best charities to donate to, and donate to the relief effort there. And you know what, just hope that things work out for the best. We will talk to you on the next episode. Thanks for listening and happy investing to all of you.
Sara 28:12
Thanks, Jason.
Jason Hartman 28:15
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