On this Flash Back Friday show (original Episode 327, published in July 2013) Jason Hartman chats with listener Michael. Jason talks about what he would do if he were new to investing. They go into the basics of self-management and its advantages. They go through a few property profiles and discuss returns.
Jason Hartman 0:00
Welcome to meet the masters of income property investing. I’m your host Jason Hartman. The 2019 meet the masters of income property March 23, and 24th in Newport Beach, California. What is
Jason Hartman 0:18
the sort of the one trick, the hack the secret that really empowers people to success, income property, the most historically proven asset class in the entire world. Register today at Jason hartman.com. forward slash message. Early Bird pricing ends Friday, February 1. 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
Michael 0:49
to real estate investment and so I picked up so much information one
Jason Hartman 0:54
of the great things about it is that it’s so fragmented, right? embrace the fragmentation Jason Hartman calm forward slash masters. 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 1:19
Welcome to creating wealth with Jason Hartman. During this program, Jason is going to tell you some really exciting things that you probably haven’t thought of before and a new slant on investing fresh new approaches to America’s best investment that will enable you to create more wealth and happiness than you ever thought possible. Jason is a genuine self made multi millionaire who not only talks the talk but walks the walk. He’s been a successful investor for 20 years and currently owns properties and 11 states and 17 cities. This program will help you follow in Jason’s footsteps on the road to financial freedom, you really can do it. And now here’s your host, Jason Hartman with the complete solution for Real estate investors.
Jason Hartman 2:10
Welcome to the creating wealth show. This is your host Jason Hartman. This is episode number 327. And today’s guest we will have on will be a Jerome Corsi, you’ve probably heard his name. He’s written many, many books. He’s quite a scholar on several subjects. So I think you’ll enjoy that interview. And if we have time, we’ll have a collar on as well. But first, I’ve got Michael here to join me for the intro portion of the show. And we want to talk about some tips for investors. Michael, welcome. How are you?
Michael 2:37
I’m doing great today. Jason. How you doing?
Jason Hartman 2:39
Good. Good. on your Facebook this morning. You said that Newport Beach was like Hawaii. It looked and felt like Hawaii. What did you mean by that? Is it hot and humid?
Michael 2:47
Yeah, it was I was going to Toastmasters at 630 in the morning and it was kind of cloudy, extremely humid. So most people would see that and take man it must be really beautiful but it’s just it’s more like One of those tropical storms that comes in and I think you’re probably getting hit by that monsoon type weather as well right now, right?
Jason Hartman 3:05
Let me tell you something last night, it was amazing. It was about 10 o’clock maybe 1030 and for the first time in my whole life, I got an alert on my iPhone. I did never happened I don’t know how that’s generated or maybe the National Weather Service or some emergency alert service thing. Anyway, it said dust storm dust storm warning. And so you know we get these dust storms in Arizona they’re not too great but they’re not as bad as it might seem. And you know, once your windows are closed, so you know about a half hour at I thought that’s really weird. And about a half hour after that, sure enough, there is this incredible dust storm and keep in mind I live like 300 feet above the ground in the tallest all residential building in the state of Arizona. And if you’re listening in New York City and 300 feet, no big deal, right? But we hear that It’s a real high rise. And you know, I have floor to ceiling glass almost throughout my penthouse, there’s very little wall space. I have a lot of pictures from my last house that I don’t have any place to hang, because the wall space is virtually all glass. And this storm starts and I don’t know how fast these winds were blowing. But it felt like they were going about a zillion miles an hour, and I went outside and the dog would bark and out on the decks. And it was just crazy out there. I mean, it was crazy. Last night now, I’ve been into storms before and in our last creating wealth seminar I showed one that I filmed last summer, and it was in the daytime so you can really see it at night. You know, you can’t really make heads or tails of it. But these storms they call them have boobs. And that’s the Middle Eastern name for these sandstorms that happened in the desert. And the pictures were phenomenal. I showed them at our Memphis, creating wealth seminar and property to a couple of months ago. And wow, they’re just not splitting This one that different thing about this one is it was long. I mean, it lasted. I don’t know, I think over an hour and I finally just, I was so tired. I just went to bed. And I woke up about an hour and a half later, and it was it was gone. But it was crazy. I mean, the storm was crazy. It was loud, and windy and dusty and things were flying all over the place. And Whoa, I mean, I couldn’t believe that people were I looked down on the streets and there were some cars out people were driving a little bit but
Michael 5:32
it was not picturing like the Scorpion King when the giant I think it was that movie when the giant brown cloud of sand starts tumbling in and everybody disappears. I don’t know if it’s, I’m sure it’s a little sensationalized in Hollywood.
Jason Hartman 5:45
That sounds like some cheap Japanese horror movie like Godzilla or something. I don’t know about this one, the Scorpion King What’s that? I don’t know what
Michael 5:54
it was with the rock and something in like the Middle East. I don’t think I even saw the whole thing, just a part of it. But you know, that’s a A common a common scene and in movies, I feel like the crazy Arabian Desert Sandstorm that comes in and suddenly, you know, they’re drinking tea and a nice little tent set up and then everything’s just blown to bits.
Jason Hartman 6:13
That wouldn’t surprise me. Yeah, I gotta get a little worried that like the windows could break here or something. But they’re so thick. I mean, the mic and interesting. They’re probably bulletproof. I don’t know. Probably not. But anyway, so yeah, no, it says some crazy weather here in the summertime. Also, of course, it’s, it’s hot. So anyway, you’ve got some questions that investors commonly have. And you wanted me to answer them on the show, right?
Michael 6:36
Yeah. I just thought let’s skip some current events today. And investors want to want to pick your brain. And I think, you know, it’d be nice to get some more of this content going. And just a comment I first made so let’s go back to show 323 was Sarah and you were talking about her boat?
Michael 6:55
Yeah, I
Jason Hartman 6:56
was giving her a hard time about that. Wasn’t I If you didn’t if folks if you didn’t listen to this show, Sarah is a successful investment counselor. She’s been working with me for several years, and she bought a boat. And I was teasing her about spending her money spending too much money, you know, and I was giving her a hard time about that. And Michael, I think you really made a good point that I maybe should have balanced that out a little bit. So yeah, what is your point?
Michael 7:23
My point was, Sarah practices, what she preaches you practices what you preach, she owns investment property. And so in our internal Facebook group that we use, I said, you know, in reality, it’s probably Sarah’s tenants that are paying for that boat, not Sarah. And you are right, remind all of our investors and clients out there that all these investments are a phenomenal way to pay for things that are not investments.
Jason Hartman 7:50
So absolutely. And you know what, you are completely right. And I was probably sound like, I’m just getting too frugal in my old age, but I’m really not I mean, the whole point of this the whole point of getting rich in real estate, so you can enjoy your money and have the things and the lifestyle that you want to have. And you are absolutely right Michael and bringing that up. So Robert Kiyosaki his philosophy is pretty good. You know, he calls things like boats and fancy cars and second homes and things like that. He calls them doodads Rich Dad doodad. And so it’s kind of a funny thing. But what what his deal is, is, I think in one of his books that talked about how he was saying to his wife, Kim, that he wanted to go buy a new Ferrari. And she said, Well, okay, if you want a new Ferrari, go buy another apartment building and just make sure that the income from the apartment building can pay for the cost of the Ferrari. And you know, that’s exactly right. If you want to buy a doodad just make sure that you first buy some asset that creates income first, to pay for the doodad. The whole point here is to get out of the rat race so that we’re living on passive income, not active income. There’s no truly passive investment in my opinion. But real estate is pretty close to a passive investment. It’s it’s not truly passive. Nothing really is, in a practical sense, I’m not talking about like, the IRS is definition of a passive investment or an active investment. I’m just talking about the practical aspect. You have to pay attention to every investment you have. So you want to buy a Ferrari or boat, get another couple of properties that will pay for that very good point completely agree.
Michael 9:29
Yeah, I see people that pay cash for cars. And I think, man, if you just took that cash and bought an investment property or a couple, you could either pay for lease payments on that car and the equivalent for the rest of your life. Or you could pay for the loan payments and still be probably putting money in your pocket at the end of the month.
Jason Hartman 9:49
You are absolutely right. So Tim Ferriss who wrote the four hour workweek, which I think was a pretty good book, and I kind of want to qualify that by saying not because it was a great day. book, but just because the book made me change my thinking about some stuff, and I consider that to be a great accomplishment. A lot of the things in there, he says are kind of like, really, you know, I don’t know, maybe, Yeah, they are. But I didn’t like go out and apply all those things. And he’s given out websites left and right. And I didn’t look all that stuff up. But conceptually, the book just made me change my thinking of it. And one of the things he talks about is that, you know, one of his goals was to have an Aston Martin and I think an Aston Martin is like the most beautiful car on Earth. Besides the now defunct Fisker, which the Fisker Karma was a beautiful car to grew literally a rolling work of art right? Well, you know, when Aston Martin is that really sort of reached have an Aston Martin, and he calculated the the payments on an Aston Martin, and they were like 20 $200 a month, probably plus insurance was probably pretty high in a car like that. So it’s not that hard. Five, six little residential properties will probably produce 20 $200 a month for you. So if you want an hour And Martin, go out and generate 20 $200 a month in income property, relatively passive investment income. And Heck, go drive around really snazzy Aston Martin that’s going to depreciate like crazy fine with me. I mean, I don’t think it’s the best use of your money. But everybody wants a few luxuries and really cool material things in their life. Think about your goals that way. I think that’s just fine. No problem.
Michael 11:24
It’s kind of like in dieting, a new nutritionist that I follow real smart guy. He says there’s nothing you shouldn’t eat just better times that you should eat things. So you should eat carbs after you’ve been at the gym or immediately before. So this is kind of like you shouldn’t necessarily go spend all your money on these things, but there’s a better way to buy it. And that is with assets that will pay to buy these other items that will depreciate, but then these assets will appreciate and generate income for a lifetime. If you hold them.
Jason Hartman 11:56
You got it. That’s exactly the plan. So very good point. So we got Remember, you’re listening to flashback Friday. Our new episodes are published every Monday and Wednesday we got the doodad thing, we’ve come to some balance on that right instead of me just teasing Sarah about her her boat. And listen, I used to have a 48 foot boat. And let me tell you that thing was such an expense. The old saying about a hole in the water you throw money into, it is true with a boat for sure. The other one is the two happiest days of boat owners life when you buy it and when you sell it, that is also true. So anyway, just a little balance on that, but try to keep your spending on that kind of stuff in check. Ultimately, the goal is create wealth and buy things that will create wealth for you, rather than things that give the appearance of wealth. If you don’t save and you don’t form capital, so you can buy assets that produce income, then you can never afford the appear instance of wealth, and you want to be able to afford those comfortably when you have big giant cushions, and or they’re not going to break the bank and become a stressor to you. The important thing is to keep money and material things as the servant, where you’re the master and they’re the servant, not let them run your life, not let them own you, right? Yep. Good. Okay, so let’s talk about some investor tips and questions. All
Michael 13:24
right, we’ll take a couple. These are questions I hear from people constantly. They want to know what would Jason say? So let’s all take three of these that I had posted. Let’s just start out what would you do Jason if knowing what you know, today, if you were a brand new investor, try to give us the, the quick and the dirty of what you would do to get going and to get from novice to your first property as quickly as possible.
Jason Hartman 13:50
Okay, so first of all, that’s a great question, Michael. First of all, understand that we have clients that are all over the board. Some of them are just trying to get their first person property and get it rented out and turn it into a good semi passive investment. And some people are buying dozens and dozens and dozens of properties. And some people are wanting to buy big apartment buildings and things like that. So we’ve got people all over the board. And I love that. Because the beginning investors keep you in touch with a certain kind of thinking. And the sophisticated investors that are purchasing many, many, many properties keep you in touch with a certain kind of thinking. And we’ve got everything in between. So if I were just starting out, and I was a total novice investor who was just looking to buy my first property, first of all, I’d have to know that I’ve got to save up enough money and do enough capital formation to acquire that first property to save up for the downpayment on that first property. And then after that, I’ve got to put myself in a position where I’m doing things right. Okay, I’ve got to make sure that I’m also preparing my credit and managing my credit score and do it That in advance of that first purchase. So there are certain things that you can do. And we’ve done shows on this in the past that you can do to improve your credit score and improve your likability to a bank and make sure that you look like a good borrower. So that’s some something that you have to do. Once you’ve done those two things, then all you have to do really to be a very good investor, in large part is simply follow my 10 commandments of successful investing. We’ve done shows on that. I harp on one or two commandments, usually on every show pretty much, but you need to buy a property that makes sense the day you buy it. So that’s commandment number five, Thou shalt not gamble. Don’t be a gambler, if you live in a gambling oriented place, and what I mean by that is a state like California, or New York, New York City mostly or any sort of expensive, urban area, Boston would be one of them several areas in the northeast. would qualify is that many, many places in the state of California qualifies that. Don’t be investing in places like that you’ve got those are places where you can get in trouble too easily. You’ve got to be investing in properties that makes sense the day you buy them. So what qualifies is making sense? Well, cash flow, does the property produce income based on a reasonable down payment from day one? That is what makes sense is the RV ratio or the rent to value ratio a sensible number? Can you get about 1% every single month out of that property? Well, that’s the first thing I would do. And even before that, when you say investing, we’re assuming that someone wants to invest in real estate and income property. So the first thing I’d say even before that is commandment number three, invest in something that you own and you have direct control over be a direct investor so that you don’t get ripped off, so you don’t get some manager of the deal. Taking a bunch of your money. skimming the profits off the top, be a direct investor. So that’s all really embodied in my 10 commandments of successful investing. If you’re new to this show, type that in the little search engine on our website, at Jason Hartman calm there’s a little Google search bar there that allows you to search all of the stuff on our site. And that will help you a whole bunch. I think that’s Episode 216. Oh gosh, no. 216 was a rehash. But there was the original episode of the 10 commandments on there somewhere, probably like Episode Number 15 or 18 way back in the beginning, any we’ve talked about them through the course of the last 326 shows as well. But you know, I’m just saying where they’re all embodied in one place.
Michael 17:44
Okay. Let’s say you were you figured out what market you want to go to. There’s two houses that your investment counselors and to you, how are you gonna pick between the two houses?
Jason Hartman 17:55
Huh? Yeah, good question. So that I don’t know No, I do know, excellent. But I’m going to say I don’t know, because I’m not looking at two specific houses. First of all, I’d say that don’t be putting yourself in a position where you agonize the deal to death where you don’t do anything. Okay, you got to do something, wisdom and action, ready fire aim, right. But assuming you’re going to really do something, and you’re not going to let the deal pass you by. If you’re looking at two properties, you obviously are looking at the numbers, we format all our data in the same exact way. So when you look at the properties at Jason hartman.com, slash properties, all of those have the same format. So if you learn how to read that single page, you do not have to be a detective. You can see all of the numbers and we just did a members only call last week actually on how to read a performer and how to analyze the numbers and the metrics on a deal. So if you’re not a member, please become one for a whopping hundred and 20 bucks a year. Okay. And you can go in on the member site and you can hear the recording of These member only calls that we do. But if they’re the same numbers wise, say for example, one property has a projected return on investment of 30% annually, and so does the other property. Well, then you’d look at things like go to Google Maps, and look at the satellite view of the property and look at the Street View of the property, if it’s available, most of the times it is and which street looks like a better neighborhood. We did a show a couple of years ago, or one of our clients who was buying many, many properties in Indianapolis, David was his name. And he was looking at what he called the free lunch metric. And we kind of joked and made a name out of it. You know, if there’s a lot of free lunches in the school district of that property, then he didn’t like it as much. He likes a low level of free lunches that the government is giving out these free lunch vouchers because to him, it meant that it was a better higher income area,
Michael 19:54
but then we kind of debunked that one right or somebody to be they just said a lot of people realize they could get a free Lunch that they jumped on the bandwagon. And it made that metric a little less telling of the true economic status of the area.
Jason Hartman 20:07
Fair, fair enough. He could be looking at every single podcast, everything could kind of be debunked here and there, okay. And some people love, like section eight government assisted rentals, and some people hate them. They’re just different strokes for different folks type thing. You know, the great thing about government rental assistance, or like the section eight program, is that you know, you’re going to get paid every month, right? The government’s a pretty reliable payer, even if the money is in depreciated dollars. So So there are some things like that, but which house simply looks better? Which house has a you know, a better neighborhood which houses newer which house is older? Those are some things and this is why this can’t be done by a computer. It’s not an airline ticket. It’s not a stock. It’s not a ticket to a concert. A lot of that stuff can be done by a computer, but with income property because every house is a little bit different. You actually need to make a judgment call and form an opinion. And if I was looking at two specific properties for this question, Michael, I could probably go a little deeper into this. But looking at Google Maps, look around the neighborhood. I mean, does it look like there’s any adverse thing that might affect the property, maybe a landing strip, meaning in airports nearby, maybe a big industrial facility? Maybe a railroad track? Maybe a prison? Maybe it’s in the flight path of a landing strip, right? So these are things they’re not things that would instantly say No, don’t do the deal. But it would say the price or some mitigating factor needs to be in place to make me want to do the deal.
Michael 21:42
Correct. Okay. You know, you talked about self management before. Can you give some basics on how somebody, some thoughts that they’re going to have if they’re going to go down that road of what they’re going to be getting into and what has made it that you’ve done, easy for you Yeah, you’re 20 properties are self managed. Is that correct? No, not that
Jason Hartman 22:03
many. So basically, I like a self managing my properties. And I think that it can be done. It’s been amazing to me and I, you know, this is like a one hour discussion, okay? But look up self management on the search bar, Jason Hartman calm and search it because we’ve done shows on that, that go into great detail about self managing your properties. And my story is basically this. I have a property that I still own in San Antonio, and my property manager a few years back, he wrote a letter saying, Hey, I’m getting out of the business. And I had Karen searching around for another property manager for me, because we weren’t actively selling in that area at the time. And so she was she was looking around for a new property manager, and she found a couple and one that she really liked, and you know, she was just kind of assisting me and otherwise I would have done this myself and I’ve done it myself too. And I never got around to signing up with that property manager. And suddenly for this property I’ve never seen And this tenant that I’ve never met, suddenly, I just didn’t get around to signing the forms and hiring the new manager. And a check arrives in the mail from the tenant with a nice little note that says, hey, I guess the property managers out of the business, he said to pay you directly now. And so the tenants name was Tony. And for several years, I just self manage that property. And it worked out great. Now, if you asked me if I could self manage a property that was 2000 miles away from my home that I have never seen with a tenant that I have never met, occupying it. If that were possible, I would have told you, you were out of your mind. But now that I’ve done it, and I’m now doing it with several of my properties, you really can do it. The only thing you definitely need the real estate agent for is to lease the property to a new tenant and handle the walkthrough when the tenant moves out. And it’s funny you should ask this question, Michael because my property in Athens, Georgia that I self manage, just the tenant just moved out. Literally about two days ago. And last week, I hired a an agent to lease the property up for me. I didn’t sign up for property management, I just signed up for leasing. He’s charging me, I believe he’s charging me 50% of the first month’s rent to do the lease. And he went over, he met the tenant, he took pictures, he sent me the pictures, he said this and that a couple things need to be fixed. And he is getting quotes to fix them up. And he’s going to send them to me, and he’s going to lease the property to a new tenant. But he’s not going to be the property manager. After he does his initial one time service, handle the walkthrough with the content, advise me on how much of their security deposit to keep, if any, how much to give back. If any, and get the repairs done, get the property ready for the new tenant, lease it up to new tenant, do the walkthrough with them, get all the documents signed, check their credit screen, the tenant and so forth. He’s out of the picture. I’m the manager and you know what, it works pretty darn good. I’ve got to say I really liked self management. Now, on the other hand, if I have a great property manager in that area that does a fantastic job and doesn’t mark up the cost of repairs, or I feel that they’re doing a good job and they’re not ripping me off here and there. I’ll keep the property manager, I do it both ways. And basically, what decides for me is how good the property manager is, if they’re a great manager, I’m going to keep them like my Austin, Texas property. I’ve got a fantastic manager. I’m going to keep them. If I have a bad manager. I’ll get rid of them and I’ll self manage.
Michael 25:32
Okay, do we have time for how about one more? Yeah, let’s do okay. Let’s just what question should people be asking property managers when they’re now got the net, the house I want? And I’m talking to the local market specialist, who’s probably the property manager, what should I be concerned with?
Jason Hartman 25:47
Who may or may not be the property manager? Well, first of all, you’ve got to when you get your property management agreement, you’ve got to actually read it, folks. And you’ve got to understand what this manager is proposing here are Are they reasonable? Are they charging 10% per month plus an entire one month fee to lease it up? If there is a late fee involved? Do they keep the late fee? Do they split the late fee with you? And that means when the tenant pays the rent late, and there’s a late fee, what happens with these things? Do they mark up the cost of repairs? Or do they do the repairs? manage them at cost? And what I mean there is if someone has to go out, and they have to call a contractor out to replace the garbage disposal in a property, do they say they just pass that through at cost? Or do they charge you a 15% markup? So if that’s a $200 cost, you’re going to pay $230. Now, I don’t object to that outright. Here’s what I object to. When all of the fees are high if they want a 10% management plus a one month lease up plus they keep all the late fees plus they mark up the cost of repairs plus this and plus That, that sounds unreasonable to me. But on the other hand, if they only charge me 8% management, and they only charge me 50% lease up fee, and they pay all of the advertising costs, and they split the late fee with me if the tenants late, then it gets a little more reasonable. You see what I mean there? So you have to look at the whole picture. It’s not one thing or the other. It’s what does the holistic view of my relationship with this property manager? What does it look like? The other thing is a now that’s probably that managers, probably the person that we referred you to, which may or may not be the local market specialist that sold you the property? Well, you should always check with another property manager and do some of your own due diligence. Check with completely outside property manager and compare these things and also get a sense of how the properties are leasing how quickly they’re leasing understanding of That market from an outside source who is not affiliated with us. Now, you can use whoever you want to manage your properties, you can do it yourself, you can use a manager that you you find, you can use a manager that we refer, it’s your property or direct investor. So you get to make the decisions, which is a really nice luxury. However, the one thing I must mention to you is that when you use the manager that we refer you to, then you’ve got the ability to have leverage over them. And that leverage is a very powerful tool. See, we refer these managers dozens, if not hundreds of accounts, and you might follow my one of my 10 commandments. It says, Thou shalt diversify, and you’re buying maybe two properties in each market or one property in each market. So you don’t represent a big account to that manager. Or if you go outside and use your own manager, the one we didn’t refer, then you don’t represent a big account to that manager and you don’t have a little leverage over them. But through us through my company, you have leverage over that manager, because we refer them a lot of business. So if you have a problem with them in the future, if their service isn’t good enough, if they’re trying to stick you with a little extra fee here, they’re just call Michael, call Sarah, call Steve, call Ari, call your investment counselor, call Dave at our company, or email them and say, Hey, this doesn’t seem right with a manager and will email that manager will get on the phone with that manager. And we will help you sort through it and get better service. So you have a lot of leverage, because of the volume of business. We send that manager and that really, really is a big help to investors. It’s probably one of the biggest benefits we offer.
Michael 29:47
Absolutely. So just for our audience, we’re going to be really expanding on all these topics in the members section. So it’s on the agenda, you know, we encourage people to sign up to get some really deeper level luck. Get some of these topics,
Jason Hartman 30:01
hey, per 10 bucks a month, it’s about the best deal going. But listen, you don’t have to become a member. You get all the services from our investment counselors, regardless of whether you sign up for the membership or not that we offer Jason Hartman calm, but there’s just some additional resources there for you. And not the least of which I want to mention this again. A couple of years ago, I did a show with Garrett Sutton, who is the author of I think now two of the Robert Kiyosaki Rich Dad books about asset protection and making sure you’re getting all your tax advantages. He’s a great lawyer that has written some great stuff on this topic, and his interviews in the members section. And I mean, just that alone is a phenomenal resource for you. It can save you an absolute fortune in terms of how to structure your entities if you’re doing any entities, why you should do them, what’s involved. And you know, we touched on that on the show as well. But you know, again, he’s the attorney. We’re not an attorney. Okay. None of us are attorneys. None of us are CPAs So there’s some great additional resources like that in there. So join, get a membership and get full advantage. Just a reminder, you’re listening to flashback Friday. Our new episodes are published every Monday and every Wednesday. Michael, was there anything else before we go to our guest? I don’t think we have time. Okay. Yeah, you wanted to do a current event right
Michael 31:25
now I was gonna hit a property, but Oh, yeah,
Jason Hartman 31:27
no, we always got time for a property. Let’s just do it real quickly. Where’s this one?
Michael 31:30
This is in Memphis. And it’s, it’s in the lower end. It’s only 46,900 purchase price.
Jason Hartman 31:39
That’s one of the least expensive properties will we ever have in that range? Yeah. Wow.
Michael 31:43
So So the proform actually puts it as a cash purchase because the loan amount would be 35,000, which actually I think we can. I’ve talked to a lender that would go down that low and it makes the numbers a bit better. But even as it not, not,
Jason Hartman 31:57
not many lenders will because it’s Just too small loan amount. Yeah. When you when, when the loan amount is like $36,000. That’s like a car loan. Okay, it’s smaller than a lot of car loans.
Michael 32:08
Yeah, so this is $36 per square foot, and it’s mostly brick, which is pretty amazing. And let’s just hit some of these numbers 1300 and four square feet. It’s it’s a two bed, two and a half bath. And the cash on cash even being purchased cash is 10%, which I think is absolutely phenomenal.
Jason Hartman 32:30
What’s the projected when you’re looking at the performance there? What’s the projected overall return?
Michael 32:35
So it’s only 16? Because it’s
Jason Hartman 32:38
the cat has arrived was hash. Yeah. If you leverage that’d probably be like 40%.
Michael 32:42
Yeah, what the? With leverage. It’s 41%.
Jason Hartman 32:47
Hey, that was a pretty good guess on my part one.
Michael 32:52
So yeah, that it’s got tremendous numbers. If you want it to try to explore it. financing, talk to your investment counselor, we’d be happy to see if we can make that work. If you’re looking if you have about 50,000 cash and you just want to buy something cash, this is right there in that range. So if
Jason Hartman 33:12
you if you if you’ve already got 10 properties that you’ve used up all of your Fannie Mae loans, and you’ve gone above that limit, and spouses can each get 10. Okay, so that’s 20 properties. But if you’ve done that, and you’re just now buying cash for all your properties past your first 10 properties, then the little inexpensive property like this is great, because it won’t consume too much of your capital. And Michael, what what is the cap rate on that property? I’m curious. It’s a 10 and a half 10 and a half cap. I was telling Steve, on an intro I recorded with him that I looked at a Sam’s Club deal today. You know, I’m on the list for all these commercial real estate brokers. They sent me a Sam’s Club and this is what your brother in law does, is retail properties like this. It was $18 million and it was a six cap a 6%. cap rate. I mean, that’s just terrible.
Michael 34:01
That’s actually a pretty good cap flow for $80 million investment. I know.
Jason Hartman 34:05
But the point is, it’s kind of like counterintuitive. People think if you’ve got a bunch of money and you can do big deals that you’re going to get a better deal like a better cap rate. It’s actually counterintuitive. The cap rates go down on those bigger properties are little cheap investment properties. They’re great. I mean, they get the returns are so much higher on our little single family homes, and they aren’t a big apartment complex or Sam’s Club, you know, or any kind of big commercial property just this is this is this is why the opportunity is here for the small investor, that the numbers are better on our deals than they are in the deals the big institutional players get. I love it. It’s just awesome. It’s totally awesome. Michael, is that awesome.
Michael 34:47
I it is phenomenal. It’s it’s the little guy gets to win.
Jason Hartman 34:51
Yeah, you really do. And this is the way you can win with direct investment in in good income properties that follow my 10 commands. rules. They’re diversified. They make sense today you buy them, your direct investor, you maintain control. And you know it’s the most tax favored asset in America. It’s the most debt favored asset in America, meaning you can get the most leverage on it. Unless it’s a $35,000 loan amount. You may not be able to get a loan that small, but some some phenomenal stuff here. Let me mention our next show is with Senator Byron Dorgan and then Episode 329, was with James all toucher 330s with Robert Greene, who wrote all those great books like the 48 Laws of Power seduction, some great stuff. 331. We’ve got Meredith Whitney. She called the banking crisis before anybody else did. We’ve got less Leopold for 332 talking about some hedge fund cookery that’s really interesting. So really some fantastic shows coming up. So a lot to look forward to. But hey, let’s go to Jerome Corsi here, Michael, and thank you again for the questions today. And and we’ll keep doing some stuff like this and answer some more investor questions on the show. So and if we have time Master Jerome Corsi will take a caller as well. We will be back with Jerome Corsi in just about 60 seconds.
Michael 36:08
Now you can get Jason’s creating wealth in today’s economy home study course, all the knowledge and education revealed in a nine hour day of the creating wealth boot camp created in a home study course for you to dive into at your convenience. For more details, go to Jason hartman.com.
Jason Hartman 36:32
Hey, it’s my pleasure to have Jerome Corsi on with us for just a moment here to just talk about a single quick issue. And that is Obama’s plan to take away or take control of people’s for one K’s. We’ve talked a lot about this on prior shows. And Jerry has been on some other shows, talking about some other topics and books that he’s written. And it’s great to have him on to talk about this. Jerry, welcome. How are you? I’m doing great. Jason. Good to be with you again. Thank you. It’s good to have you back. And I know this is just a quickie discussion. Here, but what are your thoughts on the possible power grab of our 401 Ks and IRAs and, and and retirement funds in this country?
Michael 37:08
Well, I just warn people, this is a huge pot of money. It’s sitting there typically sitting in banks are investments, and the government can see it. Now. They’ve all ministrations made various overtures, they’ve held hearings. They’ve had Department of Labor, look into it public hearings, and they’ve kind of been around the edges of the topic, which is, well, maybe we should require a portion of the fees to go into a government created annuity. In other words, have you return the money, that’s Treasury with an IOU to pay you something in the future for that money? The reason I’m concerned about it as soon as the government like the United States under the Obama administration, we crippled with our debt is out. 16 going to 17 trillion from 10 trillion with George W. Bush took over so you know, we’re about to double Come on. During the Obama administration looks like the trend continues our national debt. And let’s say eight years, that kind of an alarming increase in national debt, usually at some point is going to force the government. We can’t just keep, you know, buying our own debt. Under these quantitative easing programs of the Federal Reserve, the Reserve’s balance sheet won’t absorb this much debt at some point or other. So the concern I’ve got is that other countries like Argentina, have actually gone in and nationalize retirement accounts one way or the other and effectively taken the money. Maybe they’ve left IO user guaranteed, which may or may not have gotten fulfilled and is allowing me to sing in Cyprus, when Cyprus was faced with having to get yet another government bailout, organized by the International Monetary Funds in the EU. And basically, the international bankers just confiscated a portion of the savings. deposits. Now this can happen in a Western democracy belonging to the EU, then who’s to say anybody’s deposits are really safe? And again, it’s not that I’m saying the Obama administration is breathing down your neck is going to take your 401k tomorrow. I’m just saying it’s something to think about, and to watch very carefully, because the overtures have already been made by the Obama administration. And I take the fact the overtures have been made as a serious event,
Jason Hartman 39:30
do you do you think that they will orchestrate a false flag event? Or there’ll just be a market crash? I mean, how would they lead into this type of thing, you know, and try and make it palatable in some way?
Michael 39:40
Well, I’m not sure a false flag would be created or any events that occurred as a negative event could be jumped on by the administration. I mean, you seen the Obama administration do this we get the the Newtown shooting Newtown shootings or any school shooting in the media. levy above istration pounces on that tragedy to push a gun control agenda. So any negative downgrading of the United States any kind of a pulling out of the Federal Reserve in the amount of quantitative easing the amount of our Treasury debt the Federal Reserve is willing to buy the could result for instance, in an increase in interest rates, which would make the cost of financing our debt tremendously more expensive. Any of these situations could precipitate the government saying Well, let’s just take X amount of hundreds of millions billions trillion whatever the government decides it wants, somehow or other private savings accounts, baby into the mall government annuities or government guarantees to take the cash and use the cash to solve the financial crisis at hand
Jason Hartman 40:53
and it never will. Because
Michael 40:55
unfortunately, with the western economies are doing is you know, this is not a recession. This is not a typical Kinsey and postwar downturn. My analysis has been for the beginning, that we are in a structural global downturn precipitated by opening up labor markets to under priced labor on a basis where it was economical to fire higher priced labor, the western economies which undermined middle income workers, and essentially killed the goose that laid the golden egg the global economy was being fueled by middle class demand. But when you know the work went to India, China, eventually the middle class was going to run out of spending power. And that’s the structural we today stimulate demand with Keynesian deficit spending. The jobs were created created in China, India, this has been the problem and it’s not going to be solved by deficit spending. Problems with these massive welfare states we built the proportion of the federal debt that is not a federal budget is non discretionary. spending. In other words, entitlement spending is rapidly growing over 60% of the budget, and it will not flow down just because the economy slows down. That’s the problem.
Jason Hartman 42:11
Yeah, very good points. And folks, get control of your retirement plans, at least make them self directed, if at all possible, because I think the government will go for the low hanging fruit, they’ll the easy money to convert his money in brokerage accounts, and savings accounts. That’s the easy grab. The harder grab is that self directed stuff where it could be you could have some gold you could have some real estate some private money lending, you know, who the heck knows that’ll just be so hard to quantify, and so hard to grab, because it’s so fragmented, any defensive strategy thoughts there,
Michael 42:45
what I think self directed IRAs are good diversification maybe into some commodities certainly diversifying the accounts. So it becomes harder to grab your entire account, IRA or 401k simply be Positive banks, the positive banks, his CDs is easy to grab,
Jason Hartman 43:05
that’s for sure. So you want to make it just harder because the low hanging fruit is what they always go for. Hey, I know you’ve got to go. But thank you for some quick insights on that and appreciate having you. We’ll have you again on soon. Okay.
Michael 43:16
Okay, Jason, thank you.
Jason Hartman 43:23
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