Jason and investment counselor Adam use this episode to do a question and answer session. They look at hyperinflation and how that impacts real estate. They also discuss how to save up for your first rental property. In addition, they look at the economy and worker confidence even while the real estate market slows. Jason ends the show about surviving a bear attack.

Jason Hartman 0:00
The markets were buying in a robust markets there, the population is stable and growing, and the values are stable and growing. It’s not like we’re just buying residential anywhere. We’re buying in good market.

Announcer 0:13
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

Jason Hartman 0:57
here’s your host, welcome and thank you for joining me today. This is your host Jason Hartman with Episode 1100 35 1135. We’ve got Adam back with me today. Adam, you’ve been a frequent guest, or shall I call you a co host on the show recently, how you doing? I’m doing well think

Adam 1:13
I sold 10 properties over the weekend. So things are looking good 10 over the weekend was that to one investor or was it to multiple investors it was to one, they are considering their friends of ours who are considering moving to Austin, and they were looking at buying a home and they want to live close to where we do, which is kind of a pricey area. And they wanted to pay cash for their home. And I said, you know, why? Why are you doing that? And they said, Well, you know, we want to, because they’re not even thinking about moving down here for about five years. They just want to buy the home now, and then rent it out. I said, Well, you know, how much do you think you would rent for? And they’re talking about buying about $300,000 for the home? And they said, Well, you know, we can the real estate agent told us we could probably get 15 to 1800 dollars a month for it. And so I think So you know what have you checked you heard of the

Jason Hartman 2:03
rent to value ratio.

Adam 2:05
Not only that, but let’s look at it was like let’s say you’re getting 1800 dollars let’s do high end. It’s in Travis County which the property taxes in Travis County are pretty high. I was like you’re looking at probably five to $600 a month property taxes like so your cash flowing, maybe $1,000 1200 dollars tops at that and you know you’re getting $1,000 a month off of your $300,000 house, that’s not a good return. And that wouldn’t even be near where we are they don’t even really in the area. They love it. You could take that $300,000 you could buy about 10 to 12 investment properties. And say you’re getting $200 a month which is a feasible number to hit. I was like you’re looking at 2000 to 20 $400 a month positive cash flow from those homes and you could rent exactly where you want to live. essentially free. Those homes I was like you can do that it would be beautiful because they only want to live down here about Six months out of the year anyway, because they want to go back and forth between here and then they want to get out of Texas whenever it’s summertime. So I was like, you know, you could rent a really nice place for 20 $400 a month and be great the other six months of the year so

Jason Hartman 3:14
yeah, there. You know, this idea, you know, and I used to be like this to you know, when I was younger and Dumber, I used to always want to own everything. And now oddly, I’m much richer, and I don’t want to own everything like you know, I bought, I mean, here’s the kind of toys I’ve wasted my money on over the years, right. I used to have a 38 foot gorgeous brand new motorhome. I used to have a 48 foot yacht. I bought two airplanes one a jet plane, the other is serious propeller plane. I didn’t take delivery of either those thank God but I still lost a bunch of money on one, even though I didn’t take delivery and then I used to have a second home. In many times in my life. I’ve had a second car And when I moved into the place I’m in now here on the Treasure Coast of Florida, I look at my closet and I said to my girlfriend, I’m like, why do I have so many clothes? I only have one body, I can only wear one set of clothing at a time, right? I can only be in one house at a time. I can only drive one car at a time. You know all these things. You don’t need to own them. Just use them. What you really want to own is the experience. So the example of your friends that are thinking well, they’ll come and stay in the house they own in Austin for part of the year and you know, like Phoenix, where I lived in in Phoenix, Scottsdale, Arizona before and then here in South Florida. You know, these are Snowbird areas, their famous Snowbird areas, right, where people come and live here for like half the year and to escape the winter, right? And a lot of Canadians and northeasterners and so forth. And you don’t have to own the property. You can just rent it. Okay? It’s just such a better deal. Rent things. Like I downloaded this app, which I have not yet used on my phone, it’s where you can rent a yacht. And, you know, it’s not like a complicated yacht charter. It’s more like a Lyft or Uber for yachts. Okay? And you know, it looks expensive when you look at the prices, but believe me, having owned a 48 foot, yacht by self, trust me, it’s cheap to pay 2500 or five grand for a day to use a yacht, when you can probably negotiate versus owning one, which you’ll use three times a month, maybe, and you’re going to pay way more than that, trust me. So it’s just get out of this mindset of owning things, control things, control investments, you do need to own real estate to get all the benefits from it. But these things that we all want to use in our lives and enjoy, rent them, okay, you do not need to own them. In your example of basically showing your friends who by the Work for Redfin, and big real estate company that you’ve all heard of. That was good. You showed them the rent to value ratio, basically, in a roundabout way, they can do so much better, buying a bunch of rental properties, and then just renting a home to live in, or buying it with leverage and financing it either way, either way, right?

Adam 6:20
It was amazing to me, I was like, you guys are in real estate, you should know that. Well, you know, it’s a whole different mindset.

Jason Hartman 6:27
It is a whole different mindset. It really is. So, you know, real estate is such a big area. There’s so many ways to do it. There’s so many philosophies about it. There’s just a lot there. It’s just a whole big field. So just because you’re in real estate doesn’t mean you know this thing about real estate. Right?

Adam 6:46
And especially if you’re going to be a Snowbird I mean, there’s a lot that can go wrong when you’re not living in the home that you own six months out of the year. Let me tell you something about

Jason Hartman 6:53
that. I will tell you, so I’ve talked about this before, but when I had a second home in Scottsdale, Arizona When I lived in Newport Beach, I lived in Newport Beach, owned my houses there. I own several in Newport Beach and Irvine over the years. And I remember one time I really liked going to Arizona. I really enjoyed going there. And so I was in my place in Scottsdale was a Sunday morning. I was there with some friends. They weren’t staying with me. My friends were staying in a hotel and I just stayed at my place. And I remember I woke up that Sunday morning. I slept in it was probably you know, 930 I’m an early riser mostly. And so I slept in a little bit and I remember my eyes looked at the ceiling. And suddenly my mind thought, in two years that I’ve owned this place, I slept here 11 nights. And I used to remember thinking about how I thought while I was away from that house, I thought, oh, what if a pipe broke? What if a fire started? What if I got robbed all this stuff when you don’t own that you have a much more lightweight life when you have rental properties, your tenants Keeping an eye on things for you. They’re at stake. They have an alignment of interest. Now, you might say, Well, my tenant doesn’t care about the property, but they do care about their place to live. Okay? And they don’t want it to flood, and they don’t want it to burn down.

Adam 8:13
They don’t care about your profit margin on that. Right.

Jason Hartman 8:15
But they do care about protecting their home and with

Adam 8:19
your profit margin, right.

Jason Hartman 8:20
Yeah, right. In essence, it does.

Adam 8:22
Yeah, but I remember I mean, you came to Austin a couple times looking for homes and you went to a couple other places looking for homes. And for 15 years, I thought I was going to move to Austin. I mean, I have been back and forth on Austin so many times I finally decided no, I don’t want to move to Austin. So there you go. But yeah,

Jason Hartman 8:38
I came to visit you. Yeah, that our first podcast together here. I remember that when I saw your Schroeder family mission on the wall, your mission statement. That was really, really cool. I like that a lot. We talked about it on that show.

Adam 8:50
So very good. So speaking of you were talking about snowbirds and the older people. What about the healthcare you’re telling me you you figured out how to hack the healthcare and you can help help the older people in The audience

Jason Hartman 9:00
will know not older people, just any people, any people. So you know, we all need health care. And this isn’t any big deal what I’m about to tell you, but I just want to share, like, Look, I went to the doctor two months ago, had my annual physical exam. And when I called to make the appointment, they said, well, what’s your insurance? And I was about to give them my insurance information. I just said to them, I have a high deductible. Can I just have the cash price? What does it cost for a physical and they said $134 not including blood work. So I went in and I just paid $134 and I settled the whole transaction right there on the spot. I didn’t have to receive any mail, any insurance claim forms. I didn’t have to look at anything else open any more mail. It was done. And I got a complete you know, I thought very good physical exam. She checked me out from top to bottom skin cancers. reading everything right? Now remember, with your health care, just like anything in life, you got to ask for things, you know, people will generally just be kind of lazy and not go the extra mile unless you ask them to write it mostly when you ask them to they’ll do it. Okay. So, you know, I asked her about this, that and the other thing, and she checked me out, give me a nice physical, right. And then this morning, I got my blood work done at one of these places that springing up, and I’ve done this before, a couple of times, you know, where you can just walk in and order whatever blood work you want, rather than going through the doctor, rather than going through the health care provider who will charge you a whole bunch more. Become an aware patient, and start learning about all the different types of things they test for in your blood. When you get your blood work back. You know, you probably have it from your doctor now because you’re probably not using the hack I’m talking about now. But hopefully you’ll try it when you get your blood work back. Really Look at it and see all the different things they’re testing for, you know, you’re a one C or sugar, right? You know, are they testing your hormone levels? Are they testing your if you’re a man, your PSA levels, all these different things and so learn about your blood work and really understand what’s in it and what it’s about and what the choices are. And so I go in this morning, I get a blood test for $229 which I bet you if that was through a doctor referral, that same test would have easily been six or $700 I just walked in I was fasting I you know, all I had in the morning was black coffee because I get up at like 5am I got my blood test. In a couple of days I’ll get my results they’ll email them to me and then I will post them to my doctors patient portal website and you know she can take a look at them. I’ll check out the readings are really review it myself, and I will think about it and learn about it. And after reading is off, I will look it up online. And I will learn about that become an engaged patient right now a lot of you listening already do this. And I’m just saying that the system is so burdened with insurance and bureaucracy. And I know we’ve got a ton of doctors, his clients, and a lot of you are probably listening and you’re nodding your head. Yeah, I agree. It’s ridiculous. years ago, if you’ve been around a while, as a doctor, you used to actually be able to practice medicine. Now you’re practicing paperwork and bureaucracy and an insurance claim forms. And we don’t have to get into a whole healthcare debate here. But I’m just saying, Look how inexpensive This was $134 for a very complete physical and $229 for some very complete blood work. So very, very handy thing. That’s all I wanted to say about it

Adam 12:49
will also if you’re on a high deductible plan, you can then just take your invoice from the doctor and mail that into your insurance. And so you can pay the cash price and then you can still mail it into your insurance. It’ll count against your deductible.

Jason Hartman 13:01
Right? Okay. Hey, we got a listener question. Let’s get to that. We’ll talk about bears, bear markets and bull markets, no real bears. We have time. And a couple other things. Adam, what do you got on the listener side?

Adam 13:15
So Josh Collins sent you a question. He went to Jason hartman.com. Slash ask and wanted to know said you talk about owning real estate as a hedge against inflation, which inflation induced that destruction. You also talked about it with Dan Ammerman earlier this week,

Jason Hartman 13:30
he said in the event of hyperinflation. Now, Josh, let’s tell Josh, Josh, this question is really an interesting question. And I just want to tell you, that I may not be able to answer it. You may have a least in part stumped me. Okay. But go ahead, Adam.

Adam 13:48
What so in the event of hyperinflation, do you have any case studies on how real estate reacts. For instance, if you own rental property in Venezuela, if your mortgage was five years into a 30 year amortization, Would it be possible to pay off the mortgage with one month’s rent because of the hyperinflation and devaluation of the bulevar? I believe you had a friend on the podcast is from Venezuela. Is she by chance a real estate investor? And if so, does she have a case study? I’m really curious to know if you could pay off a mortgage very quickly if the currency becomes devalued as much as the bulevar has, or are there other issues that pop up because of the extreme devaluation? Thank you for your time. Yeah, I have an answer. But you go ahead.

Jason Hartman 14:28
Okay. All right. So I’ll take a stab at it first. First of all, that friend is my girlfriend. She’s Venezuelan. She lived in Venezuela till she was 20 years old, and then moved to San Diego and went to San Diego State University. So I have heard a lot from her and her parents a lot about Venezuela. And you know, Venezuela and North Korea are super fascinating places for me. I just love hearing those stories. I’ve never been to either, you know, certainly wouldn’t want to go right now. But the first thing you have to determine is, if you had a mortgage in Venezuela, would it be a fixed rate mortgage? And how long would it have been fixed rate for and does their banking system? And I know the answer already is No. But I’ll just ask, does their banking system and mortgage system work the same way ours does? See in our system, you can’t call the loan do no matter what happens if you’re the lender, and you’ve agreed that this loan term is going to be 30 years, and as long as the borrower is performing, and they haven’t either, you know, defaulted on the loan by not paying or violating some covenant of the loan, meaning they didn’t transfer title triggering a due on sale clause or something like that. You got to let that loan sit until they pay you back no matter what the economic climate is, it could be very inflationary in Venezuela. I really doubt They have those types of protections. So that’s the first thing. But in theory if it wasn’t massive chaos and basically economic collapse, like Hungary, Venezuela, the Y, Mar Republic, Zimbabwe, etc, all those case studies we know about, yeah, the loan gets cheaper to repay

Adam 16:18
Adam, what was your thought on it? So I actually researched this a bit because it fascinated me. And it turns out that nearly all of Venezuelan real estate is denominated in dollars.

Jason Hartman 16:29
So you would actually isn’t that handy that they look to the reserve currency.

Adam 16:34
So that’s actually why they’re in relation right now is because they have to print more and more bulevar to pay back the dollars that they owe. So what would actually happen is let’s say you have a $30,000 house down there 30,000 US dollars, and your renters are paying you in both of ours because they probably are if you’re the landlord, you are actually getting less and less money every month because of the inflation. Yeah, maybe originally you’re, you know, renting out your $30,000 house for $300 a month or three, you know, whatever $300 and bulevar was, but now suddenly that bulevar amount is probably only like, what, two cents now? A month. So you would actually be getting hammered by that. And you’re also assuming that the government of Venezuela isn’t just going to swoop in and say, Hey, we’re taking your property right, which is been known to happen in countries in this situation?

Jason Hartman 17:29
Yeah. No question about it. Well, you know, Venezuela will just nationalize your property if they want to. Yeah, Maduro is a dictator. Right. So it was interesting when I was in Eastern Europe, and I did I did several podcasts from there. And I’m not talking about a recent Eastern European trip. You know, been every summer I go to Europe. Usually. This was a trip about, oh, 10 1112 years ago, and I went to five Eastern European countries. I remember I was in Bulgaria. They had just joined the EU. And I went there looking at real estate. That was the reason for my trip. It was interesting that I met with several banks. I went into the bank, I sat with loan officers. I met with real estate brokers, and they denominate the mortgages in the dollar, or at least they did back then, like you could pay it in euros or dollars, but the mortgage was like, pegged to the dollar, no matter what currency they used. Right. And, you know, just because you’re in the EU doesn’t mean you’re on the euro. So Bulgaria and Romania had just joined the EU at that time. What was that? 2007 I’m pretty sure was 2007 the currency hadn’t changed yet. I’m not even sure it has now. But they’re in the EU, right? And so you see all these EU projects where they’re building highways and infrastructure and you know, it’s a business plan. They tie those mortgages to the dollar. So the dollar is the it’s the reserve currency the world, you know, and it’s got a lot of power behind it. So, if you think differently, I think you’re probably on the losing side of that trade if you don’t believe in the dollar the almighty dollar. Welcome to meet the masters of income property investing. I’m your host Jason Hartman.

Adam 19:18
The 2019 meet the masters of income property March 23, and 24th in Newport Beach, California.

Jason Hartman 19:30
What is 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.

Adam 19:45
Register today at Jason hartman.com. forward slash master. Early Bird pricing ends Friday, February 1.

Jason Hartman 19:51
Let’s break this down and look at some of the strengths of income property as an asset class and I found that this event is really helpful because I am totally I’m 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.com forward slash masters. Okay, what’s another one?

Adam 20:15
Alright, so now you have an Adam question coming at you. All right. So REMAX has come out and said that there are more homes for sale now than at any point in the last 10 years. Yep. And there’s also year over year home sales dropped 11%, which is continued since August. So the question I have is 2018 saw workers quit their jobs at rates unseen since 2001. And they were able to do that, because they were so confident that they could get a job that would give them a raise because they say, you know, if you ask for a raise, you’re going to get like a 123 percent raise. But when I quit and get a new job, it bumps up about 15%. So that’s the best way to get your market rate is quit and get a new job.

Jason Hartman 20:56
Right But a lot of times, a lot of times, I just want to warn Workers listening, okay Workers of the World unite. Okay, is that you know, a lot of times that new job doesn’t pan out because the reason many times that new employer is so generous, they’re being foolishly generous, okay. And they have an unsustainable position. I’ve seen that happen to a lot of people over the years, okay. A few of them have worked for me and left or a few of them, you know, left someone else and came to work for me, but most of them just on the outside, I’ve heard stories of other people, friends, clients, etc. So this Adam is the wealth effect, right? We’ve had this booming economy, we’ve had this booming real estate market. We’ve had this booming stock market and it’s a sign of overconfidence.

Adam 21:45
So some might have that is Yeah, if there’s such overconfidence, why do you think the year over year home sales are are dropping?

Jason Hartman 21:53
Well, because that is really it’s two factors, mostly First off, it’s the cyclical markets, the markets that are overpriced, and they need to adjust and they need to decline. Because markets on the West Coast markets in the northeast, these markets are all to one degree or another crashing, okay? They’ve been totally overheated overvalued and they are a mess and they are in for correction and they have been correcting for a while. That’s one reason. So that reason is a slowing market and buyers rejecting the overpriced properties. That’s one issue. The other issue in the parts of the market that we’re in the linear type markets, the more conservative markets, those markets are just exhibiting a lack of inventory. So you can have a slowdown for either reason. And so we see this dichotomy in the marketplace right now. We’re all these linear markets, the markets we like still have very low inventory and high supply and buyers. And then the cyclical markets, it really is a tale of two markets as the paraphrase an old saying, right Tale of Two Cities, right? It’s a tale of two markets that we really have a very pronounced dichotomy in the US real estate market right now, where the linear markets, lack inventory, and have too many buyers. And the cyclical markets have finally seen the softening and call it a crash and some and an adjustment or correction, whatever you want to call it, where we have an oversupply of inventory and a lack of buyers. So they’re, they’re like opposites. It’s not interesting.

Adam 23:36
Yeah. We now we have one more listener question. And then I want to hear the bear story.

Jason Hartman 23:41
Oh, okay. Okay, go for it. So Zach

Adam 23:43
says, Zach just got out of graduate school and got his first job. And he wants to know how much money he should say before he starts investing in real estate. And he also wants you to know he loves the different perspectives that you put on investing. So my answer to Zach is Zach Your first job, get whatever emergency fund, you feel comfortable with enough that you feel comfortable. If you lost your job, you’d be okay. And then start saving up for your first property. It’s as simple as that to me.

Jason Hartman 24:14
Yeah, that’s good. I think it’s good. A lot of financial advisor types will tell you you want a six month emergency fund. Now, that doesn’t mean Well, I don’t think it means that it has to be six months of income saved up, but you know, I would say if you’re following their plan, it would be six months of expenses saved up, right because hopefully your expenses are a lot lower than your income, assuming you got in trouble lost your job, lost her source of income, and it would be six months of you know, minimalism type expenses, right just to survive, okay and get by with the basics without upsetting your life too much. And then as far as the person property goes on top of that. You want to have the downpayment, the closing cost, and 4% of the value of the property. So if it’s $100,000 property, you want $4,000 off on the sidelines, as kind of the emergency fund for the property. And then you’ve got the other emergency fund for your life. Now, you can certainly save more than this. But remember, you don’t want to save too much. Because if you save too much, you are losing money on that dormant money that’s not working for you. So it’s very, yeah, lazy money. You don’t want to have sleepy money. You don’t want to have lazy money. You don’t want to have too much money sitting around doing nothing. It feels good to have a lot of that money, but taxes and inflations are eating you alive.

Adam 25:53
All right. Now Michael wants to know, Michael listens to the podcast, and he wants to know How did your bear story And you can’t just say your tent was attacked by a bear and not finish the story.

Jason Hartman 26:05
Yeah, okay. Okay. Okay. This happened a long time ago. This question came in a long time ago too. So I apologize for taking so long to answer it work. We really are trying to work through the listener questions. So I did mention that I was attacked by a bear. Okay. And that’s not exactly the way it went. Because I know that your vision of someone being attacked by bears were the bear mall view, right. The bear did not actually touch me directly, but the bear did attack my tent. And it was scary. Let me tell you. Here’s what happened. I’m hiking with three buddies, Mike, Gary and Ed. were hiking up San Gorgonio mountains in Southern California. Okay. And we’re camping. Right? So we’ve got our tents. We’ve got our gear. We hike up the mountain all day long. My friend Ed. He decides that you know what isn’t good enough now this will come into play later. There’s a reason I’m telling you this water isn’t good enough. He wants to drink iced tea in his canteen not water, right because water is too boring. And so we get to the campsite and Gary is like a professional woodsmen. This guy’s like Grizzly Adams and he just the guy loves the woods. And my friend Mike was they both really love to camp and be out in the wilderness and they go on very long camping trips and all this stuff. So both of them as we’re cooking dinner, they’re like, you know, don’t leave any crumbs around the campsite, it’ll will attract bears. Do you have any toothpaste with you that will attract bears? And I’m thinking wow, are these guys paranoid or what this is just too much for me. And then Gary pulls out this round plastic cylinder, and we’re going to hang that in the tree with some other stuff so they get the ropes out and they get the things that have any smell at all to them and Hang them in the trees have a barricade get them. You don’t want them anywhere near your tent. Well, we go to sleep. before going to sleep. This happened. I got to tell you this part ad is a former Army Ranger and Ed has his 357 Magnum gun with hollow point bullets in it. Okay. And I remember saying to him as the gun was sitting there, are you sure that should be right there in between us as we’re going to sleep? You know what if we roll over onto the thing that fires something right. And listen, I like guns. I think guns are great. Guns cost freedom. You obviously have to be responsible with him. But whatever. Right? So Ed says, Okay, well, I’ll put it over here. And so we fall asleep 20 minutes after his I’m just drifting off to sleep and screams this blood curdling scream because the bears Paul was literally like pulling him through the tent in the side not with its claws out. It didn’t pierce the tent, and just wait till the end because this gets really insulting the story at the end here. Okay, so I wake up, and Mike and Gary wake up. And we’re like, what’s going on? The first thing I see is my eyes open. I see the Paul the right hand, Paul of a bear. crunching the top of the 10th of 10th maybe, I don’t know, four and a half feet high, five feet high, pushing down probably two feet as it’s like playing with the top of the tent. It’s just doing that with its Park. And you know, the moon was out so I could see the shadow of this bears pot was huge. Like and get your gun. We were just talking about the gun, you know? 20 minutes. Oh, get the gun. And finally when it comes to his senses, he actually looks like a professional like he’s been in the military. He pulls that gun He’s ready. And I had a flashlight, like a one was mag light flashlights with a whistle on it, you know, attached to the end because I always heard that whenever you go camping or hiking, you should bring a whistle. And I blew the whistle and it scared the bear away. That was it. No gun fired or anything. So that was it. I almost died of a heart attack. And guess what, Adam to make that story? Super insulting. Guess what happened The next morning, before we turned in that night before. We saw that there were a bunch of Boy Scouts camping, you know, maybe 100 yards away or so. And the next morning, as we’re up, you know, the boy scouts come walking by the whole troop. And they said, hey, what was all that racket last night? And he said, Oh, bear this and then they said oh, that was a raccoon. Know It. Trust me. It was not a raccoon. I promise. It was Not a record when I was not elucidating but yeah, that was that’s my bear story.

Adam 31:04
That’s no man who strangled mountain lion. What’s that happened?

Jason Hartman 31:08
Oh the man Oh yeah, I read that story he

Adam 31:11
he it’s a good story but it’s no strangling a mountain lion and

Jason Hartman 31:14
so it’s it’s not that intense. That was that jogger recently who, who got into the mountain lion attacked him and he basically broke its windpipe. And he said the mountain lion did not let go with his clinch claws into the guy’s body until it took its last breath.

Adam 31:34
That’s why runnings dangerous.

Jason Hartman 31:36
Yeah, running is kind of dangerous. I agree. You know, so sometimes exercise is not all good. Yeah, that’s true. Hey, I want to share a couple quotes. When I was unpacking Adam, I found this old old quote book, you know, I’ve always loved quotes since I was, I don’t know, you know, teenager. I had written down all these great quotes in here and you know, they’re in my old handwriting like Now as I was a kid, I just share a couple of these with our listeners before we go. There are no rules, laws or traditions that apply universally, including this one. It’s pretty good and author Adam. And then of course, there’s that Calvin Coolidge quote, nothing in the world can take the place of persistence. Talent will not. Nothing is more common than unsuccessful men with talent. Genius will not The world is full of educated derelicts. persistence and determination alone are omnipotent. The slogan press on has solved and always will solve the problems of the human race. And then here’s one This will be the last one for today from jack Paar. I always like this one. Because you know, when it comes to real estate investing or so many other things in life, we get in our own way, don’t we, as Sarah would say, we shoot ourselves in the shoe, right? Instead of a foot. And jack Paar had this great quote, he says My life seems like one long obstacle course, with me as the chief obstacle. And you know, that’s pretty much true of all of us. You know, we all get our own way. So we got to just realize that and get out of our own way, don’t we?

Adam 33:15
Yeah, I have one quote. I would like to share it something I saw at the gym that’s been helping me recently. What’s that and it’s by Drew Brees, the quarterback for the saints. When you wake up, think about winning the day. Don’t worry about a week or a month from now. Just think about one day at a time and never worry. If you’re worried about the mountain in the distance. You might trip over the molehill right in front of you when the day

Jason Hartman 33:39
right. Very, very good, quote. Very good quote. When you said mountain I forgot to tell our listeners how that ice tea tied into that bear story. The reason the bear attacked our tent was because Ed on the way up had spilled some of that iced tea onto his sleeping bag. Egg. And that’s why the bear was pawing at him through the 10 because it could smell the sweetened iced tea. So very ago yeah, forgot to that was the tie in with the estate, because we did everything right. But we forgot about that iced tea spill thing that killed us right? Or almost killed us. So yeah, something else. Hey Adam YouTube channel, we got to remind our listeners to go to the YouTube channel and please subscribe A lot of you have been, we are publishing some great content on our brand new YouTube channel. Just go to YouTube search Jason Hartman, it should be the first result. And please subscribe and check out the videos. I think you’ll like them a lot. We’re doing content just for YouTube. So check that out. And then also, of course, meet the masters of income property coming up next month just over a month away. Jason Hartman comm slash masters

Adam 34:55
if you have any questions you want to ask Jason not on the show, but right to his face. That’s the best place to do it.

Jason Hartman 35:00
Yep, definitely, definitely do that at meet the masters. And we’re going to be announcing some musical entertainment soon. That’s just going to be a great event. I cannot wait to have George Gilder speak. And Tom wheelwright, Pat Donahoe is going to be doing a great speech too. So it’s going to be an awesome weekend. The theme of this year’s meet the Masters is the big, boring and profitable idea, the big boring and profitable idea. You’re going to love this big, boring, profitable idea, because we’re going to take the old refi to die example. And we’re going to add a couple of very interesting Well, one is very boring, actually, but it’s very profitable dimensions to it. And we’re going to do that on the form of an exercise that you’re all going to love So yeah, don’t miss meet the masters. Jason Hartman comm slash masters, Adam, let’s say farewell. Until next time, talk to you all then. All right. Happy investing. 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 heart and 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.

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Jason Hartman hosts Investment Counselor Sara as they go into some of the issues clients are having. They also talk about interest rates and how they have been so low. They end the discussion looking at whether you should get a refinance or a line of credit.

Investor 0:00
So far I haven’t had any issues in the sense of with the turnkey vendor or the management company. The management companies have been exceptional, you know, responsive, quick, professional. It’s great. You know, for somebody who’s really busy, this is a great way to invest. Now, I have to say that being a skeptic, we went outside of your network. We did go to another turnkey vendor. We went to, you know, the place where they did their work. They had this beautiful binder with pamphlets, and they looked at it, and then they went to show us the houses. And it was not what I expected. You know, the thing that scared me is we went to an older house like this, this is a great investment property. They went into the basement, and there was literally a electrical junction box with four wires coming out and one of the side hanging in midair, hanging in midair. So at that point, it was well, we’re not doing anything with this team of people and we went back. We went back to organizations because I hate this I’m a commercial, but they’re just quality people.

Announcer 1:03
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 the complete solution for real estate investors.

Jason Hartman 1:53
Welcome to Episode 1297 1297 on the E of Episode 1300. Thanks for joining us. I’ve got our investment counselor, Sarah, who you’ve heard on the show many times over the years, over the last 12 years. We want to talk about some things going on the market, congratulate some of our clients who are just doing awesome things in the investing world, and kind of go from there. Sarah, welcome back.

Sara 2:21
Hey, Jason, thanks for having me back. Give us your

Jason Hartman 2:24
kind of pulse on the market. There’s a lot of talk about, you know, when will the next recession hit and hit will hit it will be here, folks. So we’re going to help you be ready for it. You know, people are kind of wondering what is coming next.

Sara 2:39
I’ve been wondering a little bit myself, but to be honest, the only time I hear about a recession is when I listened to your podcast, or when I turn on the news.

Jason Hartman 2:47
I’m Mr. Negative.

Sara 2:53
You know, people are pretty upbeat. I think everybody’s excited that interest rates have once again dropped A little bit. This is really allowing new clients to get into the game and our existing clients to restructure some of their debt and their portfolio. I’ve been doing a lot of portfolio reviews with our clients to see, you know, where we can do a cash out refinance and roll into more properties. You know, sometimes you’ve had a property for several years, the rates go down a little bit, you can stretch out that termit alone, pull cash out and, and increase the cash flow a lot. Yeah.

Jason Hartman 3:31
Good stuff, good stuff. So so that’s the refi till you die plan. You can also just renegotiate your interest rate with your lender and potentially get a non refi interest rate reduction. Yes, that is really happening, folks. It is really happening. So don’t be afraid to ask if, especially if that loan is a portfolio loan with your lender and they have not sold it off. Many times because they know if you refuse Finance, you’re probably gone, you’ll probably go to a broker that could broker your loan to any one of a whole number of lenders, and they’re probably going to lose you. That’s a customer retention strategy, that they may just lower your rate without a refi now won’t help you get cash out if you want cash out, you got to refinance. But that is another option, another strategy to consider. So the portfolio makeover, I’m really glad you’re doing a lot of those lately. Sarah, listeners, that’s something you should be doing with your investment counselor every single year. And if you don’t have an investment counselor, if you’re not working with us yet, again, it’s free. You know, we earn our income when you buy properties with our referring affiliates, okay, that we refer you to. That’s how we get paid. So our advice is free. Just take advantage of it. Get free consultations. Have Sarah or other investment counselors help you restructure your debt help you make the Plan, move assets around, reallocate, rebalance your portfolio, if you will, and any other things you want to share, like some examples here of any clients that have been doing that specifically with you. He’s in Southern California has been working with us for many years. Basically, what I did is I sent him a blank spreadsheet for him to and it’s pretty brief, he just filled out some very basic information that I needed, you know, property address, the estimated value, and then I calculated, you know, what his equity was and his rent to value ratio. And sometimes it makes sense to sell a property and sometimes it just makes sense to do the refinance. You know, we did the review, we found some places where he could pull some cash out and lower his payment, lowers interest rate rather. And we just got him in touch with one of our lenders and we do have some lenders that can lend in all 50 states. So if you’re looking to cash out and two different properties that are in different states, you can do that with one lender simultaneously. So this lenders really do make it easy. Now he’s working on his identification into a new market looking at some new construction. And, yeah, we’re really excited, he should be improving his cash flow pretty nicely, you everything you can do is you may want to do the refi and pull cash out on your primary residence. And many of you listening live in expensive markets, the West Coast, the Northeast, South Florida, or, you know, anywhere around the world for that matter, you can refinance that property. And that can be a really good source of equity for Remember, you still have essentially the same amount of equity, you’ve just diversified it more into other properties and other markets. Yeah, and the only thing I would caution without on your primary residence, and the lender will stop you from over leveraging, right, they’re going to require you to keep some equity. Usually they require you to keep about 25% of your equity in the property, but just be careful not To over leverage, at the end of the day, you still have to make that mortgage payment on your primary residence. And so when you pull cash out, your payment will go up. And so nowadays, you don’t really even need to give that warning because the bank isn’t going to allow it in before the Great Recession when they were being really silly and stupid, then you have to give that warning maybe, but right now, the banks have become so conservative that not too much to worry about. But yeah, go ahead. And one common question I get around that is, should I do a refinance on a 30 year fixed rate loan? Or should I just put a lock in place he lock has a home equity line of credit. And the answer is, you know, really depends. Depends what your existing interest rate, if you’ve got a really low good interest rate on your primary residence, it might make sense to just keep that in place and do the line of credit. But you know if you can get about the same interest rate that you already have, and Then you can lock in a new 30 year fixed rate loan, that’s probably the route to go today because the rates are still pretty low. And the home equity line of credit usually is a 10 year loan and then you know, can adjust, and you don’t have that 30 years locked in. So if you can refinance your entire loan and improve your position, then I think that’s the way to go. What are your thoughts on that? Yeah, well, I agree if you can reduce your risk by having a little more leverage, which doesn’t make you a target for a creditor for a foreclosure, if things really go down the tubes again, like they did during the Great Recession, that higher loan balance actually offers protection. And I’ve talked about it many times over the last 15 years. I know it’s counterintuitive. If you’re new listener, you’re probably not going to get it but you know, listen to the old shows, it’s been talked about many times, just go to Jason hartman.com. and search the best insurance is a high loan balance. Okay. If you search that You’ll find our episodes on that where we have taken a very detailed look into that. And that’s a good plan. And Sarah, you you also alluded to, although you didn’t mention it, specifically, the portfolio makeovers where you’re helping clients do 1031 tax deferred exchanges, a great vehicle. Income property is the most tax favored asset class in America. And taxes are the single largest expense in anybody’s lives. I have done many, many 1031 exchanges myself. I’m in one now, but there may actually be a couple of options that are better. Yes, I really said that. Better than a 1031 tax deferred exchange. I have been geeking out taking a deep, deep. I mean, anybody who knows me knows that. I have a little bit of OCD, okay. Little bit obsessive compulsive. When I get intrigued by something, man Am I just chased that to the end of the earth? And this is one of the things I’ve been doing. I’ve spent hours and hours reading, learning, watching videos, consulting with people, financial advisors, lawyers, law firms exchange accommodators on Well, what? Well, I’m not going to tell you, I’m going to tease, okay. Because here’s the deal. I’m going to talk about this at profits in Paradise, okay? It’s, it needs really a whole episode or a couple of episodes, just to go through it. Okay, just like a 1031 exchange, what I mean, you know, we do entire episodes on 1031 exchanges, and there’s still more to know. Okay, so I’m going to talk about our profits in Paradise, but it is a way that you can potentially relinquish properties sell properties or a business, and it’s not the opportunity zone. I want to just say that, I think the opportunity zone as you’ve heard me on past episodes, is totally overhyped. I think it’s overrated. You know, there’s a few small number of people that it fits and makes sense for I’m not saying I’m not saying it’s completely invalid I just think it’s completely overhyped is all there’s all these promoters out there making tons of money essentially, it’s a bait and switch in a lot of ways from most people. It’s just no big deal okay?

Sara 11:25
I remember Jason years ago there was the go zone now the go

Jason Hartman 11:28
zone was a great deal.

Sara 11:31
It was a great deal however, I purchased a property that was initially in the go zone and then they read designated the lines and I lost that deduction. So yeah, you don’t be

Jason Hartman 11:44
anything that you’re doing in a mixer you know about it. There was another was another flaw with the go zone besides that one, okay. And by the way, just so you know, even though they redrew some of the lines, or there were misunderstandings and misinterpretations about them, a lot of people took that deduction and got away with it. Okay, so I’ll just put that out there. But here was the thing that happened with the go zone. Now this was years ago. And again, past episodes are up there of the podcast, you can find them at Jason hartman.com. Just use the search engine there to search goes on. But here was really the problem with the go zone is that tax incentives like that, and it’s happening with the opportunity zone to they distort markets, they really cause a lot of distortion. And almost immediately after the go zone tax incentive began, the money just rushed into these certain markets, and the properties became overvalued, so quickly. We recommended it at the beginning, and it was a great deal. I bought a whole bunch of those goes on properties myself. I just loved the tax benefit. It was phenomenal. But after a while, all these promoters were still out there promoting this stuff and I’m like looking at these deals. saying it’s crap, these deals are just not good. I remember I got into arguments with some people. They said, Well, you know, we want to bring your property our properties to your network and have you promote them and stuff and we’ll pay you. And I’m like, I’m not promoting this chunk.

Sara 13:17
I remember. Yeah, I remember there was one group and I don’t even remember who it was half away, maybe. I don’t know. But it was it was a group I want to say it was like in Biloxi, Mississippi, and they wanted to promote their stuff and the properties look kind of junky or janky. I don’t know they didn’t look great. And for whatever reason, our gut said not to work with that group. And they ended up getting into some, like legal trouble. They ended up being a bad apple. So you do you know when these opportunities come up, you really do have to just keep in mind, the deal has to make sense without the opportunity

Jason Hartman 13:49
exact without the tax benefit.

Sara 13:51
Without the tax benefit, right.

Jason Hartman 13:53
Don’t let the tail wag the dog. The deal must make economic sense by itself without Any special model leaseback or subsidized rental income or tax benefit or anything it needs to just make sense by itself. And and then if you get these extra benefits, it’s icing on the cake.

Sara 14:14
One of the clients I’m working with on an exchange, you know, everybody’s on everybody’s email list, right? And so, there were somebody we used to work with years ago, we don’t work with anymore, and he was on their list. There was a model leaseback opportunity, which is just a brand new construction home.

Jason Hartman 14:28
I saw that Yeah. Hey, listen, listeners, I want to tell you something. When we stop working with someone, there’s a reason, okay. So if you want the updated information, you better talk with your investment counselor, you need to be talking with us, because

Sara 14:47
you worked with them. And five years ago, that doesn’t mean today are so good. And just I’ll just make this quick but basically what happened was that the seller sent out a performer with like 20 $600 in rent Is that what the builder is going to pay for two years,

Jason Hartman 15:02
which is not the market rent and not the market? Right?

Sara 15:05
The market rent and he he had an appraisal and the appraiser said that the market rent was about 2100. That’s a $500 a month Mrs. Yeah,

Jason Hartman 15:14
ridiculous. It’s totally overstated. Here’s what these scumbags do these weasels, what they do is they guarantee the rent back, and not all of them do it. But sometimes it’s a ploy. They guarantee that rent back through some different LLC or corporation, and then they just don’t honor it. And what are you going to do sue them it’s such a small amount of money, it’s not worth suing them. That’s the problem. Our legal system is such a disaster, you know that it just doesn’t make economic sense to actually hold anybody accountable sadly. And even if you do sue them, it’s just this entity that’s like this entity with the little to no assets, so they’re just gonna bankrupt it.

Sara 15:55
Yep. So check back in with us, you know, before you put a property under contract chuckwei Let us run it through our Performa and make sure that the deal actually makes sense.

Jason Hartman 16:06
And Sarah, I heard your dog taken in the background I think he’s taken agrees with that talk to your investment counselor it through Jason Hartman calm we’ll have a phone consultation with you and go over all that stuff. Okay, so we got off on this goes own tangent opportunities own it’s not you’re going to love this folks, if you’re selling stocks, properties, a business, any of these highly appreciated assets, we really have a couple of vehicles that can help you. You’re going to hear about it at profits in paradise register at Jason Hartman live.com. That’s Jason Hartman live.com. And we’re going to have the property Tour The day before. I’m really excited about that. I just think this is going to be a great event. It’s not a big event. Now. Some of you have complained, hey, listen, we’d like to have huge events right for our own self interest, but You guys love the small to mid size events, you know, you get more attention, you know, frankly, and it’s not as crazy. So this is one of those events it was, you know, when we held it last year in Hawaii was a small moderate group and it was nice. I think we had, you know, 60 people give or take. And so it’s not crazy. It’s not, you know, 200 it’s not 300 people, I think you’ll enjoy it. So be sure to register for that. And we’re combining it with a property Tour The day before. So that’ll be fun. You can actually see properties and purchase them

Sara 17:32
the day before the event really excited for the tour. As I’ve mentioned before, I’m bringing my son Jordan, he’s 13. So be his first property tour and conference. And he’s really into real estate. So I’m really excited for it. I’m excited to hear your new talks and hear what you’re learning about and what you’re into. You’re always into something new.

Jason Hartman 17:50
Yeah, I’m trying to be I’m trying to be you know, real estate is very slow changing industry. That’s why there’s no TV station like CNBC, dedicated to real Because there, there just wouldn’t be enough to talk about 24. Seven, right? versus stocks, you know, they’re up there down. It’s a rollercoaster. You know, the insiders are stealing all your money. There’s always a story. Right, right. But that’s not the case with income property because it’s just a really stable, true good asset class. So that’s what you want. Sarah, did you want to talk any more about any of your clients that have purchased or closed on properties recently and what they’re up to?

Sara 18:30
I am working on a pretty good size 1031 exchange with our client, Jim. I’m also from Southern California. He just identified some properties, and people don’t do this. And Jason, you did this to? You called me last Friday or Saturday and said, Sarah,

Jason Hartman 18:47
I’m getting scolded here about something. What is she gonna say?

Sara 18:51
You called me you boxed me. Oh, I was at a wedding. This was a few weeks ago. I was

Jason Hartman 18:55
at my brother’s wedding. So I know I did that to you myself.

Sara 18:58
Yeah, and I’m like in some garden with no reception out in Temecula

Jason Hartman 19:02
like in the middle. They don’t know what you’re gonna say What did I do? scold me? Yeah,

Sara 19:06
yeah so like I gotta identify my 1031 exchange properties by tomorrow Can you find me some property

Sara 19:15
at this wedding like texting everybody emailing everybody trying to get you some properties and

Jason Hartman 19:21
and thank you You came through by the way you give a I got a bunch of them yeah you know sometimes I feel like the shoemaker with no shoes you know I’m too busy helping other people to help myself So

Sara 19:34
Jim did the same thing to me last weekend and I was surprised he he didn’t seem stress about it at all but we’ve been talking you know, working together closely we’ve been looking at some deals, nothing quite he really wanted multifamily and it’s hard to find like good deals and multifamily so we found a few that he didn’t really like. And I’m like, Jim, you’ve got like three days we got to find you some properties like let’s look at some single family. So I you know, sure enough at the last minute I found him a 10 unit deal and very rare and hard to find that deal. But he literally identified his property the day before. So don’t don’t be like Jim and Jason. Okay, get it started early, you get 45 days from the time you close to identify your property. So call me early. Let me know when you’re getting ready to sell your property so that I can be on the look for you.

Jason Hartman 20:21
Yeah. Now, just so you know, listeners, what’s here is referring to is that when you do a 1031 tax deferred exchange, and you sell the properties, you have 45 days to identify what’s called the up leg property, the properties you’re buying a property or properties, you’re buying to replace what you’ve relinquished. And then you have 180 days to close on them. But in 45 days, you have to identify them. And that identification has to be time stamped, either by a postmark or any you know, nowadays, it’s usually an email right? So I had to email my exchange accommodator Saturday at midnight. This time Sarah is talking about a couple weeks ago, I did have some properties already lined up, you know, I was ready. I wasn’t as prepared as you’re making me out to be. But I just wanted to see if there were any better deals. That’s why I asked you. So thanks, Sarah, for helping me out with that. I appreciate it. But yes, do not wait to the last minute for sure. How about some other clients? Or what’s the vibe? What are they asking? You know, what are what are the clients feeling just this sort of anecdotal stuff, I think is good for people to hear. We present a lot of empirical data on the show, but just this, you know, the conversation, the vibe is is important to

Sara 21:35
Yeah, I mean, the conversation I’m really having with people is just do your due diligence, make sure you don’t skip your inspections. You know, I like properties that are like A or B class. And I know we’ve talked about that a million times. Some people still go after the cheaper properties and it’s fine. I mean, you can buy a couple of those cheaper properties, but just make sure your overall portfolio is You know, in good areas, I like that bread and butter rental property, you know, that little rock property that’s 115,000 and rents for, you know, 1100 a month and said three bedroom, two bath, you know, just maybe a 1500 square foot house, just a basic rental property. And so that’s what I’m working really hard on sourcing for our clients, in addition to the new construction, which I love. So you want to have a diverse portfolio have a few different types of properties, and not just different markets, but different classes and right ranges.

Jason Hartman 22:34
Good stuff. All right, great. Anything else you want to share with clients as we wrap it up?

Sara 22:40
No, just I really urge you to come to profits in paradise. I will be there and look forward to meeting with a lot of you. I’m excited for the tour the day before. If you have questions about anything, give us a call. We’re happy to answer and yeah, we look forward to seeing you in just a few short weeks.

Jason Hartman 22:56
Right. And by the way, you know, we always talk about websites. And everything. But if you want to just pick up the phone and reach out to any of our investment counselors and our team members, you can just call one 800 Hartman that’s one 800 h AR t ma n. for international people, it’s probably better to just go through the website, but our regular line is 7148200 4210 because the 800 number doesn’t work outside of the country will look forward to seeing you at profits in Paradise and talking with you soon. Until then, happy investing. 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 heart and 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.

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Jason Hartman and investment counselor Adam start the show with a listener question from Amina. She wants to know what her options are given that she’s maxed out her Fannie Mae and Freddie Mac loans. Then Jason brings on David Nelson and his wife for a client case study. They discuss their real estate portfolio and how they have been able to retire early as a result. David emphasizes the need for continual education.

Investor 0:00
After I started going to events and hanging out with some of the great people in your client base, I was talking to a group at the Cincinnati and poverty tour and one of the guy I told I’m maxing out my 401k they’re like, why are you doing that? What Why don’t you just do where the company matches and then take the rest and invest in real estate. You know, it’s like a big light bulb light bulb moment. So I did that I dropped my I was putting like, 17 18% you know, pre tax money into this, that I had no control over. So I dropped it down to where the company was matching, which makes sense. And then I’m taking the rest out and buying more property.

Announcer 0:38
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 out 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 1:28
Welcome to Episode 1193 1193. Thank you so much for joining us today. We’ve got another client case study a returning client, who was on a few years ago and has been building a great portfolio. He and his wife, David and Gina Nelson, have been building a great portfolio now they’re up to 26 units. I was surprised I didn’t know they were doing so much with us. So I was happy to hear it. And we’re always grateful to have our clients on the show. Of course, we’re grateful For the business and the support, and we want to support you any way we possibly can. But I tell you, we learn a lot from you clients. And I know you listeners learn a lot from our clients. You keep telling me that so we want to invite more clients onto the show. If you’re out there and you want to be on the show, just contact us through the Jason Hartman. com website. And we’ll see if we can get you on the show. And have you scheduled for your 15 minutes of fame as it were. It’s an old cliche. I’ve got Adam here with me and before we get to our case study today, we have a listener question Adam fire away. So this is from Amina and Amina wants to tell you that she likes your show because there’s no pretentiousness no frills just to the point up to date information regarding investment with a focus on income properties. Well, Amina, that is very much appreciated, but some people might not say I’m to the point. She doesn’t hurt my tangents I don’t think right maybe your attention They’re close enough to the point I think they are. But some people don’t. Anyway, go ahead. She said she started listening to the show about four years ago and found that you’re so sincere that within two months, she started buying properties. Instead of the few podcast she listens to this is number one. concept of inflation induced debt destruction. Yes, inflation induced debt destruction. Say it 10 times fast. If you can, I can’t. What she really wants to know is for someone who’s maxed out their 10 available, Fannie and Freddie conventional loans. What are the options for you after you get through with those? Yeah, that’s a great question. Amina. So for everybody else. What Amina is talking about is that coming out of the Great Recession, they put a cap, while the two major secondary markets for mortgages, Fannie Mae and Freddie Mac, put caps on how many mortgages people can have and it first coming up One of the great recession it was for mortgages. And as you might imagine, that wasn’t very good for business. And it wasn’t very good for the economy either because you investors are a huge stimulus to the economy. Think about the processional effect. And this might be a tangent alert of your investments, right? When you buy a property, you are employing a whole bunch of people that fix up houses that paint houses that install appliances that make appliances. Wow, you do a lot of stuff investors. So pat yourself on the back. And be sure to understand your huge contribution to the economy and keep on doing it because you really are a giant part of the economy, real estate investors. So they did increase it to 10 loans. And before that, there was really no limit and some people had hundreds of mortgages. Were not back there yet. Maybe they went a little overboard back then. And obviously, we did have a mortgage meltdown, which was only part one of the great recession. Part Two was Wall Street. But what do you do after you buy 10 properties and you finance them. And you want to keep building your portfolio, you want to acquire 26 properties like our client case study guest coming up here in a few minutes. There are several options. Number one, if you are married, and by the way, if if you’re single, this might be a reason to get married.

Jason Hartman 5:39
If you’re married, and your spouse can qualify, then they can get 10 loans also. So between the two of you can get 10 each or 20 mortgages and therefore you can finance 20 investment properties and whether or not you’re married to go beyond that. 10 loans. per person limit. Thankfully, capitalism being a very efficient economic philosophy has filled the void to some extent by bringing in all of these groups that are offering some pretty good financing for you to go past that 10 loan limit. And these are hedge funds, private equity groups, and various I’ll just say institutional lenders that aren’t following the Fannie Mae and Freddie Mac guidelines. In fact, they cater to real estate investors, and they offer some pretty good products not quite as good as what we call the agency loans or the Fannie Mae Freddie Mac loans, but they’re they’re pretty good. I mean, the rates are a little higher, the terms aren’t quite as good, but they’re not bad. And then the other option B That is you can do hard money loans. And those rates are much higher. They are really not geared for buy and hold investments. They’re geared mostly for flipping properties, the hard money financing, because it’s it’s pretty expensive. And you would only want to use it on a short term basis whenever possible. Adam, any thoughts or things to add, you do our mortgage update every month on the Well, usually on the first Monday of the month. Anything to add to that? Well, I would just say whenever you’re looking at the mortgages and the proform, is you just need to take into account as you’re starting to look at the site and looking at the pro formas. And knowing that you’re going to have to adjust your cash flow based on that. So if you see it marked like they are right now, like five, five and a half percent, but you know, when I go to these institutions, I’m going to get 7% say, right, you need to make sure you factor that in because our performers are based on the Fannie and Freddie the interest rates, not the higher institutional rates, right and that, that’s an Another good reason to actually subscribe to the property tracker software, you can get on Jason Hartman calm and get that discount link there. Because then you can work with a dynamic performer where you can change all the assumptions, not just the mortgage rate. And I’ll tell you that was really a good part of my training on becoming a good evaluator of properties. Back in 2004, yes, way back in 2004 15 years ago, when I started using that, that great software, I would do performance constantly. For properties, I would make them myself. The perform, of course, is just the one page sort of outline of the properties performance. And you can find those all at Jason Hartman calm in the Properties section, but those are static. So if you actually subscribe to the software, they’re dynamic, where you can put in your own assumptions, you can change your Everything you can change the rental, the projected rent, you can change the mortgage rate, you can change the vacancy rate, you can change the repair and maintenance costs everything and then it just becomes your own. But if not, if you don’t want to subscribe, then you can simply calculate the mortgage payment there’s a million mortgage calculators on the internet, then you can just insert that new number into the Performa and, and for example, if it says that that property has a projected cash flow of $200 per month, but with a higher interest rate, as Adam mentioned, that you you might get from one of these non agency lenders, these sort of institutional but non agency lenders that don’t comply with Fannie Mae Freddie Mac guidelines. Maybe your mortgage will cost $70 more per month, for example. And so your $200 cash flow projection will now go down to $130. So still Certainly not a bad deal but not quite as desirable. So your first 10 are going to be the best deal. And if you’re married then that that additional 10 would be your spouse gets, those will be the best. And everything after that will not be quite as good, but it’ll still be pretty good. Alright, so um, you know, thank you very much for the question. If you have a question make sure you go to Jason Hartman comm slash ask and we will get it answered as soon as we can. Right and also go to Jason Hartman calm and right on the front page. Check out our upcoming cruise to Grand Cayman Cuba and Jamaica and that leaves from Fort Lauderdale you really do need to get that booked because prices are going up. And our I don’t even want to say room block I want to say space room block or cabin block on the ship. Holland America Line nice cruise ship. I’ve taken them before they run a first class operation. It’s going Be an awesome adventure Alliance trip and you don’t have to be a member to come You can come as a guest, of course members get member pricing. But you can certainly come as a guest. That’s just going to be a phenomenal trip. Cuba is one of the most interesting countries on the planet. I mean, I’d say probably the most interesting country on the planet is North Korea. But I’m too chicken to go and visit I did recently visit South Korea. And we went to the DMZ as you heard on a prior episode, but I don’t quite have the guts to go to North Korea. But Cuba I’ve been to before and it is fascinating, fascinating, fascinating place. If you have ever wanted to step into a time machine, come to Cuba with us, because we will put you in a time machine and transport you back to 1959. It’s really an amazing place here. You must join us. Jason Hartman, calm right on the front page. Sign up for that cruise and join us Adam, let’s get to our guests today and our client case study.

Jason Hartman 12:11
It’s my pleasure to welcome one of our wonderful clients back to the show. This is David Nelson of David and Gina Nelson, you heard them on the show before. And they have been doing amazing things with their property portfolio. growing, growing, growing, learning some lessons along the way. Lessons aren’t always easy, but we’re going to share some of those today. And, and like I say, you know, if you’re not learning some lessons and making some mistakes, you’re just not doing anything. So, David, thanks for coming back on and sharing with us. Appreciate it.

David Nelson 12:41
My pleasure. It’s absolutely honored to be on with you today. Jason.

Jason Hartman 12:45
So you were first on the show. I remember interviewing you and Gina, when we were walking back from lunch, we were in Oklahoma City property tour. And it was the first time I got to use at the time my new microphone and I was so excited about that. Right

David Nelson 13:00
That’s right. I remember that. Yeah,

Jason Hartman 13:02
I think we almost got run over by a car when we were not paying attention. That was a walking interview. Yeah. Yeah. You had Coco along the answer, right for the right. Company. That was great. That was cool. That was cool. A walking interview, haven’t done too many of those. But you and Gina have been coming to a lot of our events, and we’re really grateful to have you at them. You’ve been building quite a real estate portfolio. Honestly, before we talked a couple of minutes ago. I didn’t know you were already at 26 properties. So congratulations, first of all, thank you so much. It’s it’s been life changing for both of us. And so you started with us what in 2016? About three years ago?

David Nelson 13:43
Yeah, I started in around March of 2016. I actually spent about a month listening to your podcasts from a referral from a friend of mine, con Moran, who’s also he’s very active in your network. Yeah, Khan. He turned me on to You’re Jason Yeah. Jason Hartman. com website and I started listening to podcasts. I spent about a month listening and I jammed on a phone with a phone call with Sarah and we picked up a property in at the time Allenwood, Georgia right before Georgia became Atlanta became kind of hybrid. After that one, we picked up seven, six more through 2016 and 2017. And now we’ve partnered up with a couple of great friends that we knew through business before. And we’ve picked up another 16 doors since 2017. It’s been something great.

Jason Hartman 14:37
Yeah. Good for you. So you had the one property that you bought in Georgia, then you bought six more after that. And then you partnered with some friends? Yes. And bought 13 or 16 more doors. Did you say how many

David Nelson 14:53
16 more doors Exactly. Since we partnered up Yeah.

Jason Hartman 14:57
And now you I know right? You’re just buying your first property inside of your IRA. Let’s see from our local specialist in Jacksonville, Florida.

David Nelson 15:06
Yes, we bought two duplexes from him last January. So I had bought a turnkey back when he was doing turnkey. I bought one in Jacksonville. Yeah.

Jason Hartman 15:17
And but this is the first side your IRA is what is unique.

David Nelson 15:22
But what was good, I liked his outfit, I really got a good feeling from them. And they were he did what he said he was going to do. So he was ethical, honest, and I you know, talking to him live and your events, I you know, I got to meet him and get to know him. So I had a good trust level. So, Gina, she’s been so on board with, she’s been so supportive, she’s just amazing. And she’s an entrepreneur. So he’s actually started three businesses the last few years. One of them took off so remarkably that like I was talking to you about she left her corporate job that I got a 401k rollover into self directed IRA and now she’s buying you property in Ocala, Florida for single family residence there, so pretty exciting.

Jason Hartman 16:04
That’s excellent. So and Gina, of course is your wife and she was on the show before there is we talked about that. So and you guys, by the way, I should say are from Folsom, California, Northern California. Right, David, what do you do? Again, tell the listeners what you do.

David Nelson 16:17
I’m Information Technology supervisor for large healthcare Corporation up here and doing that type of work for 30 plus years at this company, I’m 15 years in now.

Jason Hartman 16:28
Good stuff. Okay. So when you first got to know us, your friend, comoran or client referred you to us and you listen to the podcast, and what was the first event you came to? Was it that property tour that where I met you know,

David Nelson 16:43
we went to one in Ohio. First time we went on something was it was like in June of 16. actually went and met con and his wife there at that tour, the Cincinnati tour. Yep, I remember back then. Yeah, yeah, that was the very first event then we’ve got You know, several, meet the masters and your some of your Jason Hartman education. Other events I’ve gone to Yeah. Excellent, excellent, good

Jason Hartman 17:07
stuff. You were saying that you learned some lessons and had some successes and some difficulties. Tell us about both, you know, tell us about the successes and the difficulties,

David Nelson 17:19
things were going really well in 2016 and into 17. So I got a little cocky, to be honest with you, I thought, you know, this isn’t so hard, I can do this, you know, on my own. So, I decided to go buy a property from a wholesaler without doing really due diligence. And I didn’t follow with the property inspection. I didn’t really take seriously some of the stuff that was flagged on the inspection with regard to electrical and some things and I just all I saw was potential numbers. You know, I saw this okay, I can get 1300 bucks a month for this hundred thousand dollar property, blah, blah, blah. You know, I learned a very valuable lessons after I bought I had to dump thousands and thousands into it. Get it, you know rentable, and that it was just yeah, just a very valuable lesson for me to do a better job of research and analysis. Sure, sure.

Jason Hartman 18:08
So let’s just tell people what that all means. So this was a property outside of our network. And when you say you bought a wholesaler, you know, for those who don’t know, a wholesaler, basically, I mean, this has kind of several definitions. But mostly what people mean by wholesaler is someone who goes around and tries to find motivated sellers. They tie up a property, put it on a contract that’s assignable. And then they sell that contract to somebody else. And so basically, they won’t even touch the property. They won’t even take title to the property. They don’t even ever own the property or have any intention of owning it. They’re basically creating a contract and selling the contract to another party. So you were that other party that bought that contract from the wholesaler, and that property wasn’t rehabbed. Obviously And you didn’t have as much knowledge or information about it right? What happened? Right? Yeah. And you’re exactly right. It was from a wholesaler, I, I looked at the property online. I, you know, I looked at photos, I did get an inspection and really, I talked the inspector and I should have paid more attention to the stuff that he flagged and I took the chance. I did it, it was just a risk. And I knew then ago, this is risk, but the reward was, hey, look at the rental value. Look at the great numbers I could get, you know, and I’ve never actually realized those numbers and factoring in the stuff I have the money I’ve had to put into it. Looking back I was a failure. It’s not a failure, because I won’t do it again. Right, right. Well, as long as you learned something, there are no really no failures, right? But you’re planning to soul one of your properties, I think, is that the one you’re gonna you want to sell.

David Nelson 19:48
That’s the one I’m working on. I’m almost ready to get it almost ready to sell. Yeah.

Jason Hartman 19:53
Okay. Okay, good on that one. I mean, listen, you know, everybody makes those mistakes you see dollar signs and You go for it. So don’t feel too bad about it. It happens. But I’ll tell you, I think one of the lessons here for our listeners is that we constantly are approached, you know, I’ll get an email. This happens somewhat frequently, that’ll say, hey, I’ve got a small portfolio of seven properties in Indianapolis or Memphis or some Texas City, can you sell them for me? And we always turn those people down. Okay, we don’t do any one off deals. And that’s one of the things out of the thousands and thousands of properties that we’ve sold over the years. We have never done a one off deal. I should qualify that a little bit. We have done one off deals on a few big properties, you know, apartment complexes, bigger deals, but not on the sort of what I’ll call the assembly line, single family homes in the small Plexus duplexes. triplexes for prices because one of the things That you’re really buying. And one of the things that you really want to use as a kind of the carrot and stick, if you will, is the opportunity for future business. And you need to make them see that and when it’s a guy doing a one off deal like a wholesaler, you know, there’s just not enough leverage in that kind of deal, you know, and that’s why I don’t like them. That’s why we we just don’t get one off deals, you know, we only do transactions based on an entire relationship. So if we’re not going to be in a position where we can have a relationship with a local market specialist, and hopefully over the years, sell hundreds and hundreds of properties with them. We’re just not going to enter into it. It’d be nice for some quick bucks, but I just know that we’re not gonna have any leverage and things aren’t going to usually work out well. So, so I think they’re kind of part of that lesson is just being in a transaction where you just don’t have

David Nelson 21:56
enough leverage, right? Yep. 100% agree on that one night. I haven’t nothing coincidental about it because I haven’t done it again. So

David Nelson 22:04
lesson learned,

Jason Hartman 22:05
yeah, lesson learned. I got ya, I got Yes. But you know, the great thing about income property, like I always say is you can renegotiate the deal all along the way. So, you know, that deal might get better, you know, maybe you should just get rid of it if it’s really a problem child, but it might get better, you know, you might get a better renter, you might get more money, you might decide to improve it, refinance it, there’s lots of ways that you can quote unquote, renegotiate the deal along the way. Right, right. Yeah, good stuff. So tell us about you know, any of your successes or just experiences that you want to share with our listeners from all of the other properties, all the other, you know, the 26 properties.

David Nelson 22:42
I think you have to really have some thick skin and that you’ve said it many times you don’t get emotional about it be and be area agnostic. And one of the great lessons we’ve also learned is to manage we have a few that we self managed, but most of them are property managers. Don’t be afraid to manage property managers I, I have fired many of them. And I don’t fire them the first time, I give them chances. And the I’ll give you one example in Memphis, I had one that charged me $150 to replace a flapper and a toilet. And I had asked him for that. And I said, Okay, that was the last straw you, you’re done. And I went on to another one. And I’m in the process of moving four of my properties. And Sarah helped me out finding a good property manager there. I’m moving four of my properties from one property manager in Memphis to another that’s happening at the end of this month. So don’t be afraid, one of those Don’t be afraid, and they’re helping and I think I’ve mentioned this before is let the new property manager help you take over from the old line manager, right? Yeah, I give them each other’s contacts. I say here’s what we’re doing. Go and then they take care of everything. That’s awesome. You just step out of the way and let them do it.

Jason Hartman 23:55
Now. You’ve never done any self management. I’m sure you’ve thought about it because your heroes Getting better on the podcast all the time or have you? I don’t know we do. Yeah, we have a few properties that we’re doing that the one in the ones outside of your network

David Nelson 24:09
we’re not self managing any that we got from you. We’ve got one in Kansas that I’m managing and one in Texas.

David Nelson 24:17
Denton, Texas Okay,

Jason Hartman 24:18
so you’re 1500 miles away, give or take from those properties. How’s that going? How you doing the self management? How’s it going for you?

David Nelson 24:28
It’s been absolutely fantastic. And because I got direct contact with I’m actually very blessed because the tenants are are awesome. So they’re reasonable to work with one of the guys I’ll give you an example one the one guy in Wichita, Kansas, he, he had a busted door on his dough, he fixed it himself. All he did was Show me your receipt for the part and he took care of the labor. So I just deducted the part off of his rent. It was really like 70 something box Isn’t that great? You sometimes you’re an example. Sometimes your tenant is your best Best contractor and your best manager, your tenant will be your property manager to some extent. Yeah, yeah. And I think I’d like to expand down the road when like done with the corporate gig that I’m doing. I’ll definitely look at doing some more self management and even maybe before that,

Jason Hartman 25:19
yeah, after you’re retired from the corporate rat race, right?

David Nelson 25:22
Yeah. Okay. Exactly. And that’s, that’s what it is.

Jason Hartman 25:26
And again, you know, something I want to say to the listeners, many times just because of the nature of the way things are set up, self management doesn’t take any more time. In fact, sometimes it takes less time than managing your manager. And I know there are people that have never done it, who might not believe that they might be skeptical of that comment, but I’ve done it. We have lots of clients who’ve done it. And you know, you’ve heard drew Baker on the show many times talk about it. Now he’s sort of overdoing it, if you will, in He admits that firsthand you, you saw him speak at our last meet the masters. I know David, he’s gone into self management. But what he’s really doing is he’s doing a lot of, frankly, capital improvements to his properties as he’s self managing. So he’s spending, you know, more time than most people would on it, but just to do the kind of status quo self management, you know, honestly, I just think a lot of times, it’s just easier than having a manager in the way. And I’m sure we all find this to be true. A lot of times, I mean, look, we’re not in an era where many people use travel agents anymore, but they still exist. And a lot of people have their assistance, doing things like book their travel, right, you know, book their airline tickets or things like this. But a lot of times, it’s just faster and easier to do it yourself. Technology has enabled so much do it yourself stuff nowadays, it’s just easier to do yourself. I find that sometimes, and you know, I’m sure I’ll get some criticism from this from some People, there are some things that just they just don’t make sense to delegate. And I would argue that one of them is property management. In some ways self managing is is really much easier than having a manager.

David Nelson 27:14
So anyway, we’ve talked about that ad nauseum. But Yep, good advice. I think mix and matches is not a bad gig, and you can bring it out grew went from eight or 10 properties that he kind of took it in chunks. He started managing four or five of them right away. And then I love what he’s doing.

Jason Hartman 27:29
He did it by city. He did it, I believe, first he did Indianapolis. And he took all his properties there and made himself managed and he, he liked it so much, that He then took Memphis and he self managed all his properties there too. It’s good. And you know, what I would say is that, you know, sometimes I find that just letting the world or the marketplace make a decision for me is a good way to go. So if you’re listening to this and you have a portfolio of properties, just take your worst property managers and fire them and self manage those. If you have a great property manager, just leave it alone. That’s what I do. I just kind of let the frankly I let the manager decide if I’m going to self manage. If they’re really good, I’ll just leave it alone, let them manage it. But if they’re difficult, or they’re, you know, given me a bunch of piddly little expense deductions for repairs that are sort of absurd A lot of times, you know, I’ll just get rid of them and I’ll self manage it. So I kind of let them decide they get to decide whether or not I’m going to be their customer.

David Nelson 28:33
Right? Yeah, yes, exactly. I like

Jason Hartman 28:35
yeah, I’ll take my money where it’s treated better if they don’t treat it well. money goes where it’s treated best. Yeah, good stuff. Well, what other lessons or experiences or you know anything you want to share?

David Nelson 28:48
What I look at real estate for us? I look at it kind of like the presidential election, like like Trump was an interruption to the normal process of what we’ve been doing for so many years. I think it was to me It was like a socialism interruption. But that will that’s another issue. But in a good way got us real estate got us thinking bigger. It got us dreaming bigger, it took the lid off of limiting what is possible. It got entrepreneurship in our heart and soul. It’s really meant a lot because when you combine education which you provide with actions, there’s really nothing you can’t accomplish if when you put your mind to it, and despite like the evictions, we’ve had a few evictions, we’ve had some issues, we’ve had maintenance, we’ve had this and that. But looking at the big picture, if you can look and not microwave your success, you have to look at the big picture. And look down the road five to 10 years is of something you can control. This is a great avenue and as you’ve said it millions of times as text favorite is anything you can get right. So yeah, it’s been a good ride that way. So I just say look at what your financial goals are and what your crews in control of them and then look at real estate You can I think you can get a very good marriage that way.

Jason Hartman 30:03
You know, what did you do before real estate? were you doing the typical? I know Gina like you said your wife had a 401k but when she left her corporate job she converted to self directed IRA and now is buying a property inside the self directed IRA. That’s awesome. Yep. We had a speaker on that at meet the masters. I know you’re working with them. What were you doing before just the typical like some mutual funds for one case some stones you know, whatever. Yeah, How’d that go?

David Nelson 30:28
That’s exactly right. I was doing you know what my dad told me to do. You know, it’s like put the max in and do a moderate to aggressive at your young age. And then when you get older, make it more conservative and just let them manage it and let the money build. And it was all for was I’ve got actually got a pretty, pretty decent 403 B 401k. That I have that here’s a point on that is after I started going to events and hanging out with some of the great people in your client base. I was talking to a group at the Cincinnati and Probably torn that one of the guy I told I’m maxing out my 401k. Like, why are you doing that? Why don’t you just do where the company matches and then take the rest and invest in real estate. You know, it’s like a big light bulb light bulb moment. So I did that I dropped my I was putting like, 17 18% pre tax money into this, that I had no control over. So I dropped it down to where the company was matching, which makes sense, right? And then I’m taking the rest out and buying more properties with it. So that so that was what I did. But when I retire, I’ll take that. And I’m going to do, we’re using Gina kind of as a model will I’ll do what she’s doing with her buying real estate within her IRA. And that’s what I’m going to be doing.

Jason Hartman 31:40
That’s awesome. That’s awesome. So what are your plans for the future? I mean, that sounds like you are planning to retire from the corporate rat race here. At some point.

David Nelson 31:51
Your wife is dying already. What’s your plan for your real estate investments and what is it gonna mean to you? Oh, actually did it in their 40s to I’m kind of jealous but I’ll be probably Probably right about the time I retire all I’ll be about near 59. So I’ll be able to get at that IRA.

Jason Hartman 32:07
Yeah, if you want, you could take this.

David Nelson 32:10
And we’re definitely all in. We’re all in on the just investing in real estate and making that I want to get to where I’m 80% invested in real estate and 20% or less in other areas. That’s our big picture goal. And then real estate will become my business, which it already is, but it will become my full time business. And that’ll be you know, the income from there will sustain us and when my daughter is out of college, because we’re paying cash as we go for her college, so when she’s done, that’s when I’m done. Yep.

Jason Hartman 32:45
So here, here’s the thing. Some people might be listening to that, especially new listeners to the show. If you haven’t been listening for the past 15 years. You know, you might hear what David saying and you might think that does not sound prudent to be 80% in on one asset class. And here’s what I would say to you is that number one, just remember, income property is the most historically proven asset class in the world. And David and Gina are diversified, because they’re diversifying geographically. If real estate goes down the tubes, so will the stock market. So will pretty much every other investment, okay? And income property really is a diversified asset class because it’s something that reflects so much of the overall economy, but you have such unique multi dimensional characteristics that enabled you to protect yourself from downturns. For example, if you have stocks and they go down in value, you know, that’s the end of the story. They went down period, precious metals, they went down period, cryptocurrencies they went down period you’re done. Whatever you There’s nothing else to do. But with income property, you can add some creativity to the mix, you can add gesture strategy, you can be a cash flow investor more than a capital appreciation investor and you can constantly shift you can refinance, you can improve the properties, you can let them languish and not maintain them. Well, I know this sounds crazy, right? You can be really cheap with your properties and not maintain them well and not upgrade them over the years. And you can, you know, just let the rents stagnate. That’s actually a strategy. You know, the point is your control, you can do things to adjust to the economy to adjust to the marketplace, with the stocks, the bonds, the mutual funds, the precious metals, the cryptocurrency, you can’t do anything. You’re just it’s whatever it does is what it does. Here. You can add some strategy of your own to the mix.

David Nelson 34:47
Absolutely. Yeah, we’re all in there. Good. No doubt. Good stuff. Good stuff. Well, David, thanks so much for coming back on the show and congratulations on your success. 26 doors. Hey, keep on going. How many Are you buying this year? Oh, we are definitely buying. We’re buying two more here in the new few near future, but we’re looking at the next couple of months. But beyond that we’ve got a couple of moves we’re making financially. When I sell, here’s what to do, and I sell that Indianapolis property. I’ll be looking at two more properties.

David Nelson 35:18
Well, so you’re doing a half dozen.

Jason Hartman 35:20
Yeah, you’re doing the two for one exchange. I’ve done it many times. That’s it. Yeah. Yeah. Yeah. And there’s several, there’s a few actually, the one in Ellingwood, Georgia has appreciated so much. We want to do a 1031 out of that one. So it’ll be great. So you’ll take that one property 1031 exchange, and you’ll get two more, you might even be able to get three more, you could do the three for one, potentially, it’s not super likely unless you want to buy really cheapo houses, which I don’t recommend. But you could certainly do a two for one. So and I’ve done that many times. Nice. Good. Good for you. Oh, yeah, we’re working on. Well, I wish you and Gina the best of success. We appreciate your business and a appreciate having you to his clients and keep up the good work and we’ll see you at the next event. Happy investing. 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.

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Jason Hartman hosts client Drew Baker in a two-part interview highlighting Drew’s journey into self-management. He’s being self-managing a handful of properties in the Indianapolis market and talks about repairs he’s done to retain his tenants. He discusses the software he uses and how it has helped his self-managing. Then he discussed how to accelerate his depreciation in a cost-effective manner.

Investor 0:00
Just about mid 2011, I was I was leaving command I just taken over a position in a great job at the Naval Academy for a two year position there and had a lot more free time than I did on my submarine as you can imagine, and I was searching for a way to shift active income into passive you know, I’d read Robert Kiyosaki books over the years, I really just, I mean, they just spoke to me, Rich Dad, Poor Dad, and most of the others, you know, his prophecy, it all just made a lot of sense to me. So I was looking for, you know, following his model of shifting into you know, passive cash flow income, and I’m a mechanical engineer. And the thing that made most sense to me, you know, not buying the coin laundry machine, although i think that that facility may be a great idea to but for me, it was about real estate and buildings. And so I was looking into that you happen to have a great podcast and I started listening in the teens, I think it was and I’m starting to listen to all of them. And I just kept kind of become a junkie with that. I you know, so I forgot my first property in the end of 2011 and St. Louis. I bought a few more there. I’m up to eight and my wife, Susan. Is today In fact, we’ll we’ll get her first three and we’ll she’ll be at six by the end of this month. And hopefully if all goes well, we’ll have Susan topped out and then we’ll go back and start focusing on Gary again.

Announcer 1:11
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 the complete solution for real estate investors.

Jason Hartman 2:01
Welcome, welcome. Welcome. And thank you so much for joining me. This is your host Jason Hartman with episode number 1188 1188. So we’ve got a follow up to the multiple show case study we’ve done on self management with Drew Baker. This episode actually will be in two parts today and tomorrow. And then we will have our 10th episode show on Thursday, which was a real zinger for you. So you’ll see you’ll see 10th episode coming up in a couple of days here. I’ve got drew Bach on the show. We have a variety of important topics to discuss today, not the least of which is self management. And we’re going to give you a continuing perspective on that. We want you to become an empowered investor. That is our big goal here is to empower investors to take control of their financial future. Of course, the first way you can do that is by getting away from the pool money investments, the Wall Street scams and all the rest. And the next layer once you’re a direct investor and income property is to self manage, or at least manage your managers with authority. Yes, have authority. And that’s what we help you do here on the show. So Drew, welcome back. How you doing?

Drew Baker 3:24
Great. Great. Jason. Glad to have you back in the United States. He Yes,

Jason Hartman 3:27
I am. I am back from China. And Wow, what an amazing trip. That was i was i was really quite surprised at the level of prosperity, you know, especially Shanghai, but even Guan Joe, Beijing, China was actually quite a bit nicer than I expected, you know, is the 83rd country for me. I’d never been to mainland China, only Hong Kong before. And I have been all over around Southeast Asia, Kuala Lumpur, Singapore, Valley, etc. But yeah, I was pretty impressed Now, of course, the Kyle bass. And how, yeah, how was the pollution there? I know that was a big issue in China for quite well, you know, I think the pollution is still a continuing problem. But it was not a problem for us. We didn’t get any days that were that it felt bad. In fact, in Shanghai, it was actually quite nice. I didn’t think it was polluted at all. In Beijing a little bit, but not bad. Maybe we just got kind of lucky about it. But let me tell you the type of pollution that you don’t get in China, this is good. You ready for this one? You

Drew Baker 4:40
know, I’m gonna start with leaf blower.

Jason Hartman 4:42
Yes, you You nailed it, Drew. You nailed it. You don’t get noise pollution. See here in the us here in the US. We get all sorts of noise invasions, right. We get disgusting leaf blowers, the worst invention in human history, possibly But we also get a lot of these cars and motorcycles that modify their exhaust systems. I think that should be completely illegal. What right to they have to disturb everybody else? You don’t hear any of that. It’s just very nice. You know, people use brooms in China rather than a leaf blowers. What a pleasant surprise. And then you don’t have the modified cars and the modified motorcycles. Everything’s just really quite quiet. Nice. I have a question for you. Because like, I think, for example, Tesla is building a factory in Shanghai, and, you know, anything to get done in the United States, you know, factory wise takes a couple of years if you’re going to build out something like that. And they were talking about the timeline in China. And they said that since there’s no ordinances and there may be in the city center, but like, they can build 24 hours. Yeah. And so I don’t know if I would buy that noise pollution thing in certain parts because when it comes to industry, They never sleep. Well, I’m not addressing construction. Now. We were not affected by any construction noise on the trip. I did see a lot of construction. But I did not hear construction. So I don’t know. You know, that may be a problem for some, but it’s definitely you definitely don’t have the leafblower problem. You don’t even have the gardening equipment problem. We stayed at two different Shangri La hotels on the trip and I love Shangri La hotels. They’re just gorgeous. The one we stayed at in which one was that was that I think it was the Hong Kong Shangri La. You know, I went out by the pool one morning and it was so pleasant that there was a gardener out there and he was clipping the hedges with you know manual non motorized clippers. It was just so quiet and pleasant and peaceful. I really enjoyed it.

Drew Baker 6:51
Yeah, I think my first world complaint which years can be least blower’s was going to be restaurants playing music way too. Oh, yeah. So at home No unnecessary.

Drew Baker 7:03
Does anyone like that?

Jason Hartman 7:04
Please explain. It’s I don’t get it. You know, the restaurants want to make people feel unsettled. So they don’t stay long. Yeah. So they can turn the tables over fast because it’s just all about money. I introduced the idea on this show years ago, the concept of what I call air conditioning abuse, where you walk into these places, and they’re just way too cold. I know first world problem, I get it. The same is true with what I call audio abuse. We need to start being a lot more conscious of all of these forms of abuse that we’ve got going on. And I know some of you listening think Oh, shut up you guys this total first world ridiculousness? No, it’s really not it matters. But hey, let’s get an update on your self management. You took over management of a whole bunch of your properties Drew, you spoke at our meet the Masters event about self management, you showed a ton of pictures and had one of our audience members a little angry. He’s in the property management business and he didn’t like self management. And he’s probably listening now Hi, Adele, give us an update a little bit on what’s going on with your properties.

Drew Baker 8:14
It’s funny because I the the crescendo in that meet the Masters event. When I spoke the slide that we ended up getting the interruption from was mon slide talking about all the downsides of self management. So maybe at another time, I can bring that up and we can talk about that. But yeah, things are going well with self management. You know, I took the better part of six months to kind of straighten out what I had most of the properties I’ve owned for about 10 years now. buying the first one, I guess in like mid 2010. So maybe nine years actually, I remember when you bought that property and you agonized about it and Are you glad you did looking back? It was a good investment at the time because the way I looked at it was if I could buy the property below the cost of construction and there’s a strong rental Mark In the area, it seemed like there wasn’t a lot of downside. Now granted in 2010 if you had had any money and you threw it at the dartboard, you probably would be okay. If you would have purchased golden or silver in 2010. You wouldn’t have done that. Well,

Jason Hartman 9:14
it’s so certainly the stock market’s gone up in the real estate markets pretty much gone up. And that first property you bought was in Indianapolis.

Drew Baker 9:22
Yeah, that is true. Yeah. If you’d bought gold, but you know, the thing is, you don’t want to buy gold when everyone’s there’s a liquidity issue. A bunch of people are afraid. There’s the fear level that an all time high, then everyone just floods into that. So you would have made more money if you’d bought it back when everybody wasn’t scared to death. But yeah, you’re right. So I guess if you had bought gold, it would have you never the problem with gold is gold, not really an investment because it doesn’t, it doesn’t produce any income. It just sits there and looks pretty and sure it’s a great off grid asset. So the way I look at gold is if the government comes in and tries to take everything away. That’s kind of like you’re off grid money. It’s the end of the world. Yeah,

Jason Hartman 10:06
yeah. So yeah, precious metals, as I’ve discussed ad nauseum over the past years are highly overrated, you want things that produce income, if it doesn’t produce income, it’s a speculation, not an investment. But you know, you can have a little bit of it to stash away, you know, I get the idea. Okay. So self management, how things going anything new any new information, you know, one of the nice things you’ve you’ve been doing is you’ve been improving your properties. And, you know, putting new faucets in new light fixtures with all the money you’re saving by not paying property manager. And, you know, just doing it yourself, which is really quite easy. You know, you’ve been improving your properties nicely. So I think you’re gonna see your tenant turnover go way down, and you’re going to be able to keep your tenants better and in all kinds of Good stuff. So yeah,

Drew Baker 11:01
the thing that’s nice is all of my properties were all either going month to month, or they were just about to come out of lease. So I was able to get everyone to resign, and kind of just as sort of a proof of concept for them, I said, Hey, I’m going to spend some time and kind of address some of the things you want some of the things you need and fix up the place. I mean, they all decided to resign. So I think they like what I’m doing. But you know, it does come, I’ll tell you kind of my strategy of buying the places and when I did, I sort of bought them in clusters. So I decided to sort of by three or four in one neighborhood or adjacent neighborhoods, they were somewhat close to each other. And I think the issue with that so there’s a couple things there one thing is great is like tomorrow, I’m going to have a roof replaced on one of my properties. And I told the roofer I want you to look at two other properties while you’re over there to get me an estimate. See how that rooster doing. But with that, since all the homes were built between 1999 and 2003, they’re all about 20 years old. So having bought them in clusters, you’re seeing all the roofs kind of go out at once, all the mechanicals like the H fak. all sort of start to give issues at once. So that is sort of a something I didn’t foresee in terms of like budgeting for that. Because every 20 years, you’re going to have some expense in that way that will cut into your performance. But the nice thing is, is I don’t expect to sell them for another 15 years or 20 years. So it’s going to level out but at the same time, you have to expense it this year, and then take the depreciation over 27 and a half years. So that’s what’s going on. Have you

Jason Hartman 12:42
considered doing any cost segregation studies on your properties, to take that depreciation faster on certain components of your properties and get a better tax deduction? I know since meet the Masters a lot of people been asking about that after college You’re right spoke on it. I’ve been looking into it a little more. And I did I want to remind everybody listening. A long time ago, I did a show on this, where we had a guest on that did inexpensive cost segregation studies that actually were economically feasible for single family homes where I think he was charging $995. And that makes it work, usually, a cost seg or cost segregation. It was cost prohibitive for the single family home on a large commercial property. It made sense to do it and I’ll tell you, I did it on an apartment complex I owned. It was I think we spent my partner and I spent like $28,000 to do the cost sake study. So that was a lot of money. Right? But we got it back. Way more than respect. It was a good deal for us to do that. But you know, again, we ended up selling that apartment building for I think $8.2 million. Maybe it 8.1 don’t quote me on the price, but like about a million bucks, give or take, okay? It was worth it to do that cost savings study, but usually on a single family home, you know, it’s not really economical. But I did interview against that does those so go to Jason Hartman, calm type in cost segregation in the search bar. And you can find that episode

Drew Baker 14:18
where the gentleman was on the show, offering that for single family homes for a very reasonable price. Go ahead, Drew. Well, when you did the cost sag, and then you did a 1031 exchange and other places. I know you didn’t fully cover it all. But by doing that cost, I guess it probably did make a lot of sense because you ended up selling the property. I mean, I guess it would make sense either way. But, you know, you were able to capture depreciation that you wouldn’t have been able to capture had you, you know, sold the property. Is that fair to say?

Jason Hartman 14:48
Yeah, we’ll just remember this. Ultimately, you’ll capture all the depreciation is and as time goes by, right, I mean in 27 and a half years, all depreciation will have taken place, but accelerating it because of the time value of money. It’s always better to have. I’ll gladly pay you Tuesday for a hamburger today is when he says Popeye right? So that’s the point of cost segue.

Drew Baker 15:14
My question is, since you like let’s say you are going to sell a property like a large multifamily unit, in a few years from now, doing the cost, seg would allow you to capture some of the depreciation that you wouldn’t get to see because you ended up selling the property. You may not get it all by the time you sell it. But remember, when you 1031 exchange everything just rolls into the next thing,

Jason Hartman 15:40
right him and there’s a there’s another thing though, this just came to my mind as you were bringing that up. You could probably offer that cost savings study that you paid for to the next buyer, and it would help them because that body they could use it to and you know, they may have to tweak and revise it. Sure, but at least they’ll have a base where you did the heavy lifting for them. And that’ll make it more valuable to the new buyer. But hey, let’s not get too stuck on that. Okay, let’s

Drew Baker 16:10
get to deep No, you’re double dipping the chip on that one. That’s hilarious. Yeah. Hey,

Jason Hartman 16:14
look, we’re in the capitalism over here, folks. Okay, so keep listening.

Drew Baker 16:19
We’ll help you. So yeah, no, I didn’t do any cost segregations on any of my properties, you know, a lot of these places were purchased with cash, so that you know, and they were under $100,000. So I think the cost savings wouldn’t be that. Great. And since a lot of the repair maintenance that I’m doing, like a roof, it is what it is. I don’t know that it would accelerate it dramatically. And also, you know, if it’s $1,000 it’s just one of those things I haven’t gone through the trouble to and I don’t know how much it would help me but I’m open to it. I think it does make sense in certain circumstances. Now, so you all have your tenants renewed and all the properties since you’ve been self managing You were telling me just a minor thing, but you’re using hellosign to do the leases, you know, so you’ve got like a DocuSign type platform now to make it more convenient for you and your tenants, no papers to deal with, right? Yeah. So I originally I was having my leasing agent send renewal contracts as she graciously offered to do. But I felt like since I’ve kind of spread out the lease renewals, so they don’t all collide at the same time. Having to ask her every month to do that I just thought was kind of something sticky, and I didn’t want to bother her. You know, because you have to upload the PDF and get places for them to date and sign and put in every email address. It takes like 15 minutes. It’s not a huge ordeal, but it’s to ask that favor every month. It’s kind of a hassle because I have about 10 units that I’m now self managing. So the beauty about hellosign is they have a free version that you can get three documents signed a month, which for most Your average listeners that’ll cover will easily cover their spread. And I don’t really like to have properties renew all in the same month, because if to go vacant, a lot of times the repair people I use, you know, it may just end up where I have extra vacancy because I can’t anticipate. So that’s how I approached it. And also, you know, the thing that’s important understand is, when you have a place like the place that I’m referring to is Indianapolis, where you have these unpredictable weather patterns, bad months where the weather’s horrible, and the only people moving are the ones that have to move that you don’t want as tenants per se. You know, going through divorce separating getting kicked out at Christmas, because they can’t make ends meet. I’ve just found that I have a higher likelihood of success when there’s more competition in the warmer months. So that period, or that window of time, is about four or five months. So I Find that I tried to get most of my tenants to sign to your leases. And I’d say most more than half have gone for that. So when you take a two year lease, and then you know, maybe the other half do a one year lease, and you have that four or five months wiggle room, I found that I it’s very rare that I’ll have to that will renew In the same month because of the way I kind of have it spread out.

Jason Hartman 19:22
Yep, that’s good. I think that’s good to split it up. And then always try to get your lease renewals in the prime time of your for your marketplace. I used to use a clause in my leases that said you know, even if the lease is month to month at that point, like if you you have a one year or two year lease and then the tenant just stays and for whatever reason you didn’t have them re sign a new lease. It would still say that they cannot vacate in December, for example, you know, because I just, I know I’m going to have a vacancy if they vacate into December, it’s just not a good month to lease. Right.

Drew Baker 20:02
Very good. Good point. Good point. That’s interesting that you can write that in the thing that I like about having, you know, all these clients because they are customers, you know, since they rent for me, so they have a good way to look

Jason Hartman 20:13
at it. way to look at it is your cost. I

Drew Baker 20:16
have them all on lease, the thing that I did that was kind of fun was I added up all the time that I have in rental commitments, and I know this is one in the hands better than two, you know, two in the bush. But as far as binding contractual agreements of time, you know, I looked at all these rental units, and I added up how much how many days I’ve had in commitments, and it’s something like 12 years, between all my rentals, and I was just doing the math and I’m like, I have 100 and, you know, $50,000 worth of commitments. And, you know, the thing that’s nice is that’s an annuity meaning and what you mean by that is if you add up all the months of rental income This day has contracted for, it’s $150,000. Is that what you’re saying? Yes. Okay. Also, you know, duration of time, you know, half or doing two years, the other half might do a year, all that time between, you know, nine or 10 rentals is about 12 to 13 years. And I think a lot of these people will stay even longer, and I’m sure they will looking at it, and

Jason Hartman 21:23
then a couple, you know, one or two are probably going to default to and break their lease. And you know, that’s just part of the business.

Drew Baker 21:29
Right. I’ve certainly had that. So that does happen. But the thing that’s nice is, you know, I’m looking at some of these clients, and they’ve been there for five or six years. And now that I’ve taken over self management, I mean, I have much more of a pulse on kind of what they’re doing

Jason Hartman 21:45
longer. Yeah, you ran you know what’s cool, yeah, I love it.

Drew Baker 21:49
Yeah. And so you know, and the other thing too, is I had kind of an interesting situation with one of my tenants where their lease was about to expire in about a month and so about 45 days before I said, Hey, I would like to find out whether you want to do one or two year lease and you can lock in this existing rate for one or two years, it’s up to you. And they opted for one year. And when I sent them the lease renewal, they said, Hey, I don’t want to sign yet. My lease isn’t up till the first. And I very delicately told them that in the same way that you have to give 30 days notice if you’re leaving, I need to give you a 30 days notice for the renewal. In other words, you need to give them 30 days notice to vacate or to say they need to renew what exactly do you mean? Yeah, so just in the same way that they need to give me notice if they’re leaving, I’m giving them notice of what the new leases and they need to sign it 30 days before the lease expires. That was my strategy because hey, I’m not going to have them sign the new lease on the first when their lease starts like that doesn’t give us any time. They still need to get 30 days notice but that would kick them off of the lead. renewal date. So, that’s the way I approached it. Okay, cool.

Jason Hartman 23:03
Yeah. Good, good stuff. Okay. This will be continued on the next episode. Thank you for listening and happy investing. 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 heart and 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.

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Jason Hartman continues a two-part interview with client Adam Schroeder. Adam gives us insight into the process of transitioning into self-management. He talks about maintenance and finding people to help do repairs. They also discuss what property management tools are out there. Then Jason advises on late fees and grace periods.

Investor 0:00
When we found you and your podcast, it was like, Okay, this is what we should have done the first time. It’s like the properties make sense the day you buy them.

Announcer 0:08
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 and 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 the complete solution for real estate investors.

Jason Hartman 0:59
Welcome listeners. From 165 countries worldwide, this is your host Jason Hartman with Episode 1035 1035, thank you so much for joining me today, as I come to you from Kansas City. You know, I’ve been embroiled in this case here for many years, I caught a property manager stealing from me from some of our clients. And we’ve been in litigation and I gotta tell you, whatever you do, stay away from lawyers. I know you’ve probably heard that we got a lot of lawyer clients listening out there. I hope you don’t get mad at me for saying this. But hey, look, we all know it’s true. nobody wins in the legal system. Not even the lawyers most the time. Interestingly, it is a lose, lose lose environment. When I was growing up, hey, I’m a Libra right? The scales right. I weigh I like to weigh things out. And when I was growing up as a I remember, as a kid, I used to watch courtroom dramas and I always wanted to be either a lawyer or a judge. I really wanted to be a judge the most. That’s one I thought I would do. But let me tell you that the system is a disaster, it does not work. And that’s why I created my startup project, my passion project free court.com, which maybe will be my gift to humanity if it ever gets off the ground, an online court system where people can settle disputes for free. Basically the crowd, the public out there is the jury, nothing binding. It’s not arbitration. Arbitration is a scam. If you asked me, it’s just a way that people can resolve their differences. And hey, the history of human life is the history of people having disputes isn’t it? That’s, that’s really history. If you look at history, what is history but a bunch of disputes. It’s a bunch of arguments, a bunch of lawsuits or wars, if it goes to a war. And so let me tell you just a little bit about what’s going on in this case before we get to part two, and we’ll talk a little more about self management. I also want to play a couple of messages I got from one of our clients. Andrew, who is really engaging in the self management process. And I’ll just play those messages for you. I got permission from him to play them on the air. And so you can kind of hear what he’s going through and really how much he likes it. It’s not perfect, but he likes it a lot better than having a property manager. And it’s fitting because this case I’m involved in is with a property manager, who I caught ripping me off who I caught ripping other people off, I interviewed several other victims on the podcast, you know, it’s just really hard to get justice. Let me tell you that. So here we are on the eve of trial in Kansas City, and I just found out yesterday from my lawyer that, you know, he’s getting screwed around by the other side, and we’re not going to be able to depose two really important star witnesses. So we will go to trial. If we get to trial, and don’t settle before then we will go to trial without enough evidence without the proper evidence to argue our case. And this is what happens, you know, you start out in these cases and I kind of build myself as a bit Illegal activists, right? I really like justice. But let me tell you the chances of getting justice in a court of law are very remote. And the reason is, is it’s not because you get to go in and explain your side of the story in front of the judge or the jury. It’s because of all the thousands of compromises and sellouts that happen on the way to trial. That’s the problem. That’s where you just lose, lose, lose. For example, in this case, one of the other attorneys on the other side, scumbag If you ask me, we caught him years ago, having illegal ex party conversations with the judge sent that up on a writ, which is like a appeal during the trial, you know, they didn’t care. You know, go ahead, have X party conversations, who cares? I mean, you know, that’s, that’s completely wrong, right? It’s totally unethical. You’re not supposed to do that, because it would prejudice the judge to one side or another and we caught them doing it. I mean, we caught them red handed. Did anything happen? Were there any cases Nope, nothing pitches totally ignored it is really a very tall order. So the system is broken, it’s got to be fixed. Maybe free court comm will be the thing that fixes that. I don’t know, if someone has burned you and ripped you off, go post your case there and tell us what you think it’s in beta now. Try it out, hey, it’s free. What can I say it’s a free court. Okay, so let’s get to our discussion on self management. And let me play for you a couple of messages I got. Now these are a little bit out of context, but you’ll just get a little bit of a sense and I’ve played some messages from the same person, Andrew, before on the show, as to his experience with self management. So I’m just going to quickly play these messages. And then we’re going to go into Part Two where Adam is asking me some questions about management and self management, and just property investing in general. Don’t forget to subscribe to our property cap. This is our really unique new podcast. There’s no audio, it will take you no time. But go on, for example, iTunes, I can do it right on my iPhone and look up Jason Hartman or property cast instead of podcast. It’s a property cast. What does that mean? Well, all the performers in PDF file format are on the feed. It is a beautiful thing. And it shows you what an innovator Yours truly, really is. Because everybody told me this couldn’t be done and I knew it could be done. I worked through soldiered through all the ears of the naysayers and hey, we did it. It works. So if you want to get those performance on the properties, and use it as kind of a hot sheet to get the newest properties we have available for you to invest in, subscribe to the property cast and please while you’re there, rate and review the quote unquote show it’s not even a show. It’s a PDF file, a whole bunch of them. So check that out. Jason Hartman property Cast, just subscribe, and you’ll get all the latest and greatest properties that we have come available for you. And be sure to join us in Hawaii first week in November, we got a few more registrations for that in the last day or two. And I’m looking forward to seeing you all there. Go to Jason Hartman, calm and check out our prophets in paradise event, Hawaii first week in November, you’ll love it. And of course, the property cast those are your two action items other than listening and learning. So here we go with the messages from Drew. And then we’ll get to part two with Adam and finish that up today.

Drew 7:38
Hey guys, I have another little minor update about the self management stuff. So the tenant that I had recently had placed, he is extremely handy. I have sent him a couple things and he’s installed them and they look great. So I kind of have a little bit of a proof of concept and kind of built a friendship with a guy and he has since told me that I can He did rehab work with his sister flipping houses in Miami. And he’s a local truck driver in Indianapolis. And so he just has given me ideas on ways that I can make the place a little nicer. So I’m kind of used his house as sort of a test case for the direction I want to go. And he’s very receptive to going around and doing that work at the other houses that I have in the same neighborhood. He’s like, yeah, I actually have a cousin that’s going to move in into the area. So if one of these places comes available, I’m sure he’d love to rent it. So it’s just like, by having a connection with these people, really helps bring other opportunities out that wouldn’t normally be there. And the thing that I thought was really interesting, was, you know, he was saying, hey, my wife and I are pretty handy. I mean, they didn’t have to say that it was pretty evident when they were fixing up the front yard and doing all this stuff that I didn’t even ask for. So I said, Hey, you know if I can make you turn these places, sparkle. And you guys can, you know, work on maybe one a month, just a couple hours here and there, I’ll give you a discount off of rent. So that way, it’s just a trade. And it’s like a work for food. So it’s not like I have to send them a 1099 or anything. And it just makes it really clean. They said, which I thought was very interesting was, you know, if one of these places goes vacant or something, and you need our help in just cleaning, or, you know, doing some painting or whatever, we’d be happy to do do that, you know, as well. And we can work that out, as well. So what I was saying is, you know, hey, if I acquired another place, or if I had a place go vacant, you know, it seems like 80% of this work is just elbow grease, getting in there painting, putting in flooring, you know, replacing some crusty fixtures. It’s just above basic, you know, and if I can leave the 20% sent to the experts, and you know, give them free rent in exchange, it just seems like such a win win. So I thought that was kind of a little of an interesting angle, another hack. Just thought that was an interesting new sideline. Since I bought these all within miles of each other, the proximity to have someone help me, makes it very easy because it’s also geographically close to where they live. I mean, think about that, you know, so a lot of these people that I’m hiring live on the other side of town, and then maybe a higher class area, and you know, this guy, he can go next door and knock on the guy’s door and do some of the work. So I obviously have to build a relationship with a guy and start small before I tell him to go do everything, but the proximity really, I think helps so something to chew on. The last point that I was going to make is Thought is an interesting way to think of my approach with these tenants is, I want to strive to be a better landlord than they are tenants. And I think all too often, if you ask these people like I asked my previous tenants, how they felt about everything, they said, Oh, they were terrible, they never responded. They didn’t come out and do what they promised, you know, and the tenant has resentment for that when they’re paying rent. And when the arrangement is not both sides where I’m don’t respond, and, you know, I get the late fee, and then they don’t respond. And there’s no repercussion. It just doesn’t feel very balanced. So I think that’s kind of my metric is to be, you know, the golden rule. Right. So that’s kind of my my thoughts.

Drew 11:54
And where have you found the best quality repair workers like when you get a request from your tenant, they Thank you. That actually needs to be fixed. Where have you found the best results?

Jason Hartman 12:02
Well, one of the great things about self management is sometimes the best result is the tenant themselves. Okay, I’ve had my mom on the show and she’s talked about how she I don’t know if this is a legitimate screening question either. But asking them if they’re handy. And, you know, sometimes the tenant will either be the person themselves and they will fix a lot of stuff around your house, or they’ll find the person or places like Angie’s List, okay. Any places where you’re going to get some reviews? And and no, if you know, they’re verified, actual customers are reviewing them.

Drew 12:42
And whenever you’re doing

Jason Hartman 12:44
one thing, let me say one thing about that list. Okay. So everybody listening to this that’s following our plan is investing in a diversified way in multiple markets. Okay, so Angie’s List, at least last time I used it is a localized membership. So it’s like five bucks a month for each city, right? So you’re gonna have to have three or five memberships, to angie’s list for each city you’re in, which is sort of a pain, because it’s not really set up for the type of thing we do, but deal with it. Okay. just deal with it.

Drew 13:18
Alright. So as you’re doing the repairs and thinking about that, do you put in your lease that repairs under a certain amount, or the responsibility of the tenant? Or how do you work that?

Jason Hartman 13:31
I hate to say it, but I haven’t done that often enough. I have done it before, but not enough. And you know why? Because the property managers don’t do it. property managers generally don’t want to do anything out of the box. They don’t want to charge pet rent. They don’t want to go to bat for you. You know, they just want to do what’s easy for them. Okay. And that’s something you should definitely do. Okay. My mom does it Gentleman does it you’ve heard and gentleman on the show she’s spoken meet the Masters, you know she does it. It is something that landlords do a lot, they say any repair under $100 or $50, or whatever the number is 1500 bucks, you know, tenants responsible, you know, you got to make these tenants view this, like, it’s their home. This is not an apartment building, where we’re going to come and do every little thing. Okay, this is a house, it’s a single family house and with a single family home, you know, you got to be a little more responsible, you got to do a few things. Okay. So it just comes with educating them. And whenever you’re putting together your, your contract for your lease, I was thinking today, let’s say the washing machine breaks. Obviously, that’s something that I as the landlord, I’m going to fix but if it turns out if you if you own the washing machine, right, right, that’s the first thing. So here’s, let me say something about appliances. That’s another area and this is very Market to Market. Okay, but that’s another area where you can make some extra money. You could own the appliances, but you rent them to the tenant.

Drew 15:09
That’s a little nickel and diamond. No, no,

Jason Hartman 15:11
no, no, because a lot of tenants actually rented them from those rental places, okay, which are a ripoff. I’ve rented things at one time. And one of my properties, I rented my television set to the tenant. Okay, now, this admittedly was a property I actually lived in. And when the tenant looked at it, I was living there. Okay, it was before I moved, and he said his name was Dan. Well, he’s a gas. He’s probably listening to this podcast right now. I think it was Dan. I’m pretty sure that was the tenant that rented it. This tenant I’m, I think it was Dan. Hi, Dan. Was it you? I can’t remember. Anyway. Oh, maybe it was Josh. He’s probably not listening. I don’t know. I don’t remember

Drew 15:49
if you’re listening Jason hartman.com slash ask.

Jason Hartman 15:51
Yeah, that’s right. Yes. Yes. Thank you. Tell me remind me of this. But it was years ago, and they liked my TV and I said, Hey, you know, it doesn’t fit that well. In my new Place. I’ll read it to you and I rented by television set. Yeah, like 25 bucks a month. Do you just kind of think, hey, whenever we show this house just mentioned that it’s my refrigerator, do you show it without a refrigerator and say if you want one, and we can do it for 15 bucks a month, or it’s too hard to move it, so you gotta just have it there. Okay. But the nice thing it allows you to do is it allows you to say, you know that the rent on the listing is lower. So you could say the rent on the listing is $1,000 per month, for example, but the refrigerators sitting in there, hey, do you want the fridge and the washer dryer? Well, you know, the refridge is 25 bucks a month and the washer dryer, you know, that’s 30 so you get paid $55 a month more. Okay. And a lot of tenants will just take that deal. Right, but they don’t what do you do with it? Yeah, well, that’s a problem. You can either tell them look, I really want to rent it with the house. And you know, I got several applications here and I’m probably going to choose the person that’s going to take care appliances to because I don’t want to have to move them. But if push comes to shove, they might call your bluff. Okay, other words. Okay, so, but that’s one reason, you know, choosing the tenant that is offering you the best deal is okay. You know, the tenant that rents the whole package is fine. You can choose that tenant over the one who didn’t want to do it. That’s not discrimination over refrigerators or No. Okay. You know, of course, you know, it’s like, if someone comes to look at your garage sale, and you got a bunch of furniture in your house that you’re selling, because you’re moving, right, you could make them a package deal with they’ll buy more stuff. If they buy less stuff. Well, you know, you don’t get as much deal if you just want the dresser. If you want the whole bedroom set. I’ll make you a better deal. Same idea.

Adam Schroeder 17:45
One of the last questions I have is property management software. I’ve never used it obviously since I have a professional manager. What should I expect out of it and what do they do? For the most part well,

Jason Hartman 17:57
okay, so that’s a great question. Course property tracker is great. Okay. And that’s the software that I own half of it. And it looks like I’m going to be buying my partner out or he’s going to be resigning. I’m not sure. So, look for more news on that. I can’t wait to get the whole thing because I’m gonna throw some money at it and spend some money on it. Okay, and really fix it up. That’s a great software, but it does not do every management function. It’s more of a an evaluating and tracking function that it does. Okay. Now, Drew, you know, he, I think he’s using billiam from not mistaken there are several professional property management software’s that property managers use. One of them is building and there’s yardie and there’s a bunch of others out there, okay. And I think he just for his own portfolio is using building him if I’m not mistaken. He got an account for himself using professional grade property management software, just for his own portfolio. He’s not a property manager. He says he likes it very well. So, and he also likes self management very well, much better than having managers, but what should I expect

Adam Schroeder 19:08
to get in them? Like, what do they do whenever you log in? Well,

Jason Hartman 19:11
they’ll do all kinds of things, they’ll send out notices, they have a portal for the tenant, many of them have a portal where the tenant can pay rent, by the way, cozy.co we’ve, of course, had them on the show, and they’ve spoken at some of our meet the Masters events over the years. That’s another one, you know, doesn’t do all the professional grade stuff. But, you know, it’s like an online payment system, which is handy. And you know, it’ll send out notices, it’s got document libraries three day notice to pay or quit, you know, move out checklist, all kinds of things. Now, just oh, I don’t have this software myself. Okay. I’m not actually using it. But I’ve seen the property managers using it and I’ve looked at some demos of it over the years and, but he does all the things that a professional property management company would need Okay, notices for this that or the other thing it does invoicing you know ton of stuff, okay, but just go check it out though. Look at Bill diem.com or yardie, calm I can’t remember how you spell that it’s kind of spelled funny yardie but type in property management software and just check out the websites, a lot of them have little videos on it that demonstrate what they do and things like that. So it’s,

Adam Schroeder 20:25
it’s pretty cool. Now, is there a certain number of properties you think? Or it’s helpful to get them when you hit or is it something that even if you have one or two, it would be useful? The software?

Jason Hartman 20:35
Yeah, for one or two. I don’t know that you need to go that far. But I think the reason that drew and you know, my memory is a little foggy on this. I think the reason he chose building him was because I think it had a like a sort of a small operator pricing package. And I maybe the others were more designed for Having more doors under management, I can’t remember. But again, I would say just go look at their websites and look at the pricing and, and that kind of stuff.

Adam Schroeder 21:10
Okay, and what kind of grace period Do you give your tenants if any,

Jason Hartman 21:13
my mom doesn’t give them any Grace? I remember talking

Adam Schroeder 21:15
about

Jason Hartman 21:16
checking in the hospital. I think that’s really good. Okay, no grace period, but she doesn’t charge very high late fees, either her late fees are not, you know, the kind of light Okay, compared to some, I would say no more than three days grace period on the rent, you know, the rents gotta be there in the first three days maximum orden or just no grace period, you know, I mean, just, you know, have your expectations and people tend to meet them sometimes.

Adam Schroeder 21:41
What kind of late fees do you charge? All right, well, standard.

Jason Hartman 21:45
Yeah, that’s all over the board. And by the way, there are some laws on late fees. So be a little careful with this one. Some charge like every day, they’re late. Some charge, you know, 50 bucks or 25 bucks. But you really have to have a late fee, that increases with time. Because if it doesn’t, and they say, Oh, well, you know, it’s already the fourth of the month, there was a three day grace period. I’m already got it, I have to pay the $50 late fee anyway, so what’s the hurry? No, you don’t want that. Okay. You want to cost more every day? Okay. So the answer is, I don’t have an answer for that one. And I don’t want to run afoul of any particular states law on late fees. You know, where it’s a great resource for this more legal stuff. No low, no low press. I interviewed a lawyer from Nolo press on the show where we talked. Just go to Jason Hartman, calm and type no low and oh, they’ve got great books on this. Everybody that’s going to do self management. Get yourself one property management book. You know, property management for dummies a Nolo press book. I think no law is really very good. I liked it. stuff a lot. And you don’t have to sit there and read the book. I mean, maybe if you have insomnia, you want to read the book so you’ll fall asleep, but just have it there’s a reference thumb through it, skim through it, you know, read a few things that interest you in the book. And this stuff is not that hard. It’s a lot of times it’s easier than managing another person with a conflict of interest. Okay, I’m really I’m really telling you the self management thing is, is pretty good. I do want to say one more thing. Remember, the most tender delicate time is when your property is vacant, okay. You really want to be careful with a vacant house. They can houses can have a pipe break, they can houses can get vandalized, vacant houses might have their insurance canceled, or their insurance company or insurance company doesn’t cover past a certain point. You know, if it’s more than 60 days vacant, the insurance cancels automatically so be Careful, have a vacant house know what your insurance policy says. And one more thing on insurance. Some insurance policies have clauses that say they limit their coverage if you don’t have a professional property manager. Okay. Now, you know, they think that that’s just a sort of a general safety precaution for them, right being the insurer. But I say it’s not that way in practice, you know,

Adam Schroeder 24:29
but that’s the termination. Jason.

Adam Schroeder 24:31
Yeah, it is. I know.

Jason Hartman 24:33
I know. You know, self managers should not be discriminated against. They should not have to sit on the back of the management bus. Okay, that’s wrong. Yes, it’s wrong. I tell you, it’s wrong. But yeah, so just be careful of what your insurance policy says. And you know, your insurance agent, don’t lie to them. Don’t say you have a manager when you don’t. Okay? You know, you if you’re self managing, and you’ve maybe you had a manager when you bought the policy. Then you got rid of your deadbeat manager, because you thought, hey, I want to get more control of this, I’m gonna jump in learn a little bit. And that’s the great thing too. You know, when you self manage, you can learn some stuff. You know, every time like I hired a patent attorney today to patent something that I want to patent right. And patents, I have a lot of trademarks and copyrights and all that intellectual property. But patents are one thing that I’ve only dealt with one other time in my life, right, where I applied for a patent on something. I told him today I said, I said, john, look, I want to learn something. You know, I said, How do you do the search for the prior art, you know, to see if this invention has already been invented? Right? With a trademark, it’s easy. You just type in the words on the trademark website. uspto.gov. But with a patent, how do you search it? I mean, it’s a concept. It’s like a three dimensional thing. You’ve got to figure out a way to explain it, right? I’m making them teach me because I just want to learn something. It’s interesting. Learn some stuff about property management, folks, learn some stuff. If you like it, it’ll make you feel empowered. That’s what we’re all about the empowered investor. Right. empowerment. That’s the thing.

Adam Schroeder 26:07
That’s everything I had. So those are the main questions I had about going into self management.

Jason Hartman 26:12
All right, I hope I answered them for you. Yeah. And with the clip we’re playing on this episode from Drew, who’s found out some other nice things. He’s always boxing. My mom and I, we’ve, we’ve got this little thread where we’re listening to Drew’s story as he gets into self management and he just keeps loving it. It hasn’t been all roses, he’s had a couple of bumps. He just thinks it’s a lot better when you have a direct relationship with the tenant. And you’ll hear that in his own words on that on that boxer. Okay, so, yeah, good stuff. Thanks, Adam. And happy investing to everybody. Be sure to register for Hawaii events coming up. Okay, we first week in November. We’ve got profits in paradise two day conference in Hawaii. And then we’ve got our two day venture Alliance mastermind event right after that in CO ye Okay, beautiful quiet. I’ve never been there can’t wait to go. So beautiful. Yeah. Oh, you have been Hmm. Aaron and

Adam Schroeder 27:06
I went It was our baby moon before Isaac was born.

Jason Hartman 27:09
There’s something called a baby moon, not just a honeymoon baby moon. I have not heard that. But

Adam Schroeder 27:13
yeah, just before the baby’s born before they recommend the pregnant woman not fly, you go and take a vacation. And your last big vacation before you have a visitor in your house for the next 18 years.

Jason Hartman 27:26
Or maybe longer, maybe 30 years.

Adam Schroeder 27:29
If it’s 30 years, he’s paying rent, that’s for sure.

Jason Hartman 27:32
Yeah, well, good. Good and see self management. There you go. Right. You’re not gonna hire a property manager. Are you?

Adam Schroeder 27:38
Maybe one of his brothers if I don’t want to put up with it? Yeah, there

Jason Hartman 27:41
you go. Get the brother to do it. Yeah, good stuff. All right, Adam. Hey, thanks for participating and asking these questions. Really appreciate it. I’m sure it was super helpful to a lot of the listeners. So we really appreciate you coming on the show again, good luck. Let us know how it goes. 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 heart and 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.

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Jason Hartman welcomes back returning guest Adam Schroeder. They discuss the transition from professional property management to self-managing own properties. Adam discusses how he and his wife are preparing for self-management. He talks about what information to get from your property manager, how to deal with the current tenant, and looks at various administrative tasks needing to be done.

Investor 0:00
Hey Jason, congratulations on your 1000 podcasts. That’s amazing. You are so productive. Not only that for creative wealth, but everything else that you do. Pretty incredible. Paul as well just want to let you know I’m thinking about Chin up, things are going right.

Announcer 0:20
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. You really can do it on Now, here’s your host, Jason Hartman with the complete solution for real estate investors.

Jason Hartman 1:10
Welcome listeners from around the world. This is Episode 1034 Episode 1034. This is your host, Jason Hartman, thank you so much for joining me today, as I am coming to you so gratefully and so, thankfully, from southern Florida, yes, back in the USA. It’s great to be back back from Europe, where I visit a couple of times a year. I guess you could say it’s my homeland. I was born there. So now you know, I can’t run for president. Not that I could win. But I was not born in the United States. I was born in Europe, the land of scarcity versus America the land of abundance. Yes, Europe where everything is smaller, lesser and lamer than it is in America. But I do visit there a couple of times a year. It seems like every year I was gone for almost a year. month this time I like to visit. But I got to tell you, it is so hard to get anything done there. It is unbelievable. I just can’t imagine if I was in business in Europe. Now, of course we say Europe, it’s a generalization because every country is different. Right? But, you know, the overriding theme is bureaucracy, socialism, difficult to do things. Everybody talks about the procedure. It’s this is our procedure, don’t you understand? We can’t actually think we’re drones. This is the procedure. Anyway, I gotta stop picking on Europe because I’m gonna offend more of my European audience. Hey, sorry. I know if you’re in Europe and you’re listening to this. You are not one of them. And you are frustrated by exactly what I’m telling you. Because it is frustrating. It’s very frustrating. This kind of like attitude that the government will solve all your problems. I just, it just weaves its way through every part of life. You know, people say, Why do you talk about politics so much? Politics. It’s like air. You know, it’s a big deal. It’s the context in which we live. It impacts so much of our lives. But you know, whatever. We don’t have to keep on that. So what else is going on here? So the economy is booming. Congratulations to Trump love him or hate him surpassed his growth goals in the last quarter. 4.1% I think I talked about that on the last episode. things they are booming. But let me tell you something before I bring on our guests today. You’ve heard him on the show before before we bring them on. Let me tell you something. I love a good recession. Yes, I do love a good recession. Why do I love a good recession? Because people act better in a good recession. Here’s what I mean by that. Even good people, people that are moral ethical people. Even they are human and they Get busy, and they become ungrateful. And they stop trying when everything is handed to them too easily. And I gotta tell you, in an economy that is booming, people start to suck. They just do they become ungrateful about their customers. Don’t let me ever get like that. I will never be like that. I tell you, I am always grateful for my customers and clients. Maybe that’s because I grew up poor. I hope I never take them for granted. But a lot of people do. And the other thing that happens is in a booming economy in a booming environment, every flake under the sun comes out of the woodwork. I mean, they just come out of the woodwork because it’s so easy to earn money that everybody can make it when times are booming when money is sloshing around everywhere. When times are bad when it’s harder to get by when it’s harder to make Make it when it’s harder to establish oneself in the marketplace, where inventory isn’t scarce and reputation matters and treating customers well matters. Well then, you know, you don’t see these people, they go back under the stone, you know, they live under or they go back to delivering pizza or working at Starbucks or whatever they do. But boy, when the economy is booming, every flake comes out of the woodwork. So two components here, I’m mentioning Okay, and, and you’ve all noticed in your life, right? It doesn’t have to be in real estate. It’s in every area of life. The service isn’t as good. The people don’t care as much because hey, business is booming. No matter who you are, no matter what you do, you know, the rising tide floats all ships, right. That’s the old saying the rising tide floats all the ships. And so that’s kind of the thing that is frustrating about a really good booming economy, otherwise, hey, it’s great. It’s great. But it is frustrating. And you look at it. And you know, there are all these, you know, new gurus out there, right. And they haven’t even been through a cycle yet. They weren’t doing what I do during the Great Recession. And they certainly weren’t doing it during the three recessions before that. I mean, look, folks, I’ve been doing this for more than a quarter of a century. Yes, I know. I’m old.

Jason Hartman 6:32
I’ve been doing it for more than a quarter of a century. Okay. I’ve been through the cycles. I’ve seen it happen. And you know, there is a lot to learn from that experience. I remember when I was younger and more cocky, and I know some of you are thinking you’re so cocky. No, I’m not. I’m much more humble now because I’ve been through a few things. You know, I thought it’s so easy. You know, you don’t need to listen to these slow moving experienced people. I’m bored with that. All that right, let me just go out and make money, the sun shining everywhere you know, blah, blah, blah. And I tell you, you know, those older experienced people, they know something. They’ve seen things that you haven’t seen, they’ve experienced things that you haven’t experienced. And in the real estate business, you know, I don’t think I’m gonna declare something here. Maybe you’ll think I’m nuts. I think out of anybody in this business that does what we do, basically helping people buy investment properties nationwide and build nationwide portfolios of real estate. I’m going to declare that I think I am the most experienced person in this business. Yeah, I think I am. My closest competitor is dramatically less experienced than I am. And that’s my closest competitor. Okay, who I like, by the way, I like my competitor. Well, this particular one, some of them I don’t like because some of them are just crooks. Well, I don’t want to say that too strong because I’m about Not to get sued. Okay, so some of them are just sleazy operators. put it that way. But hey, you know, my closest competitor, I’m more experienced than that person by about twofold. So there you go, there you go. I think I’m the most experienced person in this place. I’ve had hundreds of tenants, hundreds of properties, you know, done all kinds of stuff in this field. So that is my cocky statement for the day. Tell me if I’m wrong. Am I wrong? Is there someone more experienced than me? That does what I do. Jason Hartman, calm slash ask, put me in my place and tell me, I don’t know anything. Yeah, go ahead. Go ahead. I mean, I’ve been involved in probably I was kind of adding this up in my head the other day and it’s not an exact number, not an exact number. But I’ve been involved I think in about 10,000 real estate transactions. 10 Grand 10,000 in think about it, if you do the math when I was in resale, real estate, you know, I’d saw anywhere between Maybe 50 and 100 houses a year, depending on the year. And I did that for many, many, many years, almost 20. And then in this business, I know they overlapped a little bit, you know, I’ve been doing this for 14 years, and they overlapped a bit there in between, I was kind of doing both, you know, we’ve done maybe a few thousand transactions now in this side of the business. So, yeah, that’s a lot of experience. Okay. I will shut up now, because I know I’m boring you with all my experience. Okay. Let me welcome back a returning guest and a client of ours. We’ll do a little case study here. And that is Adam Schroeder. Adam. Welcome back. How are you?

Adam Schroeder 9:39
I’m doing well. Thanks for having me on again.

Jason Hartman 9:41
Good. It’s good to have you. And folks, you might remember that when Adam was on the show before he shared this awesome thing as I was staying at his house for a couple days. It was great. Stay in there with you and the kids. And Adam has four kids. So

Adam Schroeder 9:55
he’s thankfully resting right now.

Jason Hartman 9:57
Yes, yes. Yes. So that’s why I don’t hear all this noise in the background like, you know, you leave me these voxer messages and it sounds like chaos over there, Adam, it’s crazy. But I think when you’re a parent, you become a little bit immune to that sound. You know, it’s just sort of like a dull roar. You know, you got it. You get kind of immunized to it a little bit.

Adam Schroeder 10:17
But anyway, and in the background,

Jason Hartman 10:18
yeah, yeah, it’s like a fan. And it’s like white noise, your white noise machine, right? Yeah. But you might remember Adam had this awesome family mission statement on the wall in his family room in the house. And it was on the wall on like canvas and had this really cool thing and talked about it on the show before so that was good, Adam, but today, you have some management and self management. We’re talking property management questions. Apparently you stumped your property one of your property managers. You’ve got a few houses in Memphis. I know. Are you in another market to I can’t remember

Adam Schroeder 10:56
where Yeah, we have three in Memphis right now and we just signed a purchase for For one in Jackson on Friday,

Jason Hartman 11:02
Jackson Mississippi, yes, good stuff. EMI SSI SSI ppi. Okay, good. I remember learning to spell that when I was a kid. So you put that one under contract, okay. Now you’re not self managing anything, right? You’re doing property management all the way right professional man. Okay, right now. Yes. Yeah, yeah. And you had some questions for me. I think you said you stumped your property manager a little bit too with some questions. Tell us about that.

Adam Schroeder 11:29
So I was just going along with the standard property management. And then I went to meet the masters. And y’all had the kind of discussion of the hybrid model and I got interested in it. And you also during one of the property management sessions, you brought up some points that I thought, Oh, I need to ask my property manager about that and find out and so I started asking him questions, and

Jason Hartman 11:52
so Okay, so wait a sec. Wait, wait, wait, let me say a couple of things. So this was our meet the Masters conference where we had ron paul speak and john burns a bunch of other speakers. Last January in La Jolla, you were there you you actually did a little couple of broadcasts from that, that I thought was a super creative idea. So thank you for doing that. And you By the way, I didn’t say this, but you are located in Austin, Texas. Okay, so just wanted to give a little perspective, but go ahead with what you’re saying.

Adam Schroeder 12:16
I started asking him questions saying, Hey, can I get this Hey, can I get that, hey, this was mentioned at meet the Masters, you know, can I get that from you? And it just became, the more questions I asked the longer it took to get a response. And then we had our annual or semiannual walkthrough, and they did the walkthrough, but we didn’t get the report for two to three months. And then there were some problems that they wanted to fix. And I said, Okay, well, there’s no picture of that on the report. I need a picture of that to justify the expense. And it took another couple weeks or a month to get the pictures and to get all the answers. And it just became a nightmare. And I started thinking you know what, if I’m going to go through all of this hassle, getting an answer from them, I may as well just do it myself. But before I do Do it myself. I wanted to get a little bit more clarity, which is why I wanted to do this podcast with you.

Jason Hartman 13:06
Yeah. Well, you know what, folks, this is what I’ve been saying about self management. Okay. And I don’t know that that’s where we’re going with this because by the way, this interview is completely impromptu. I have no idea what Adam is going to ask me. Okay. But if it’s about self management, you know, a lot of you think that it’s harder to self manage. I submit to you that it could be a lot easier, you know, but some people think, well, I don’t have the time to manage my own properties, right, folks, sometimes it’s less time to do it yourself. Here’s a great example that I’ve have shared before. In the old days, people wouldn’t type their own letters, right. You know, I remember my mom when I was a kid, my mom was executive director of the Leukemia society, and she had a secretary The Secretary, I remember hanging out at the office there because, you know, I was a latchkey kid, and so I just hang out at her office a lot. And I’d work there too, you know, and they’d pay me like nothing. But anyway, and this was in Santa Monica, California. And my mom would say, hey, Pam, come in, Pam was her one of her secretaries that time, Pam come in and take a letter. And Pam would bring in a steno pad, stenographer pad, and write shorthand, and write what my mom would tell her and then go type it right. How many people do that nowadays? No, everybody types their own stuff, they email it, right? Nobody has people typing their own stuff anymore. Okay. It’s just not done, because it’s just easier to do it yourself. Same is true with like, you know, booking travel, for example. You know, I used to have Karen, who’s been on the show, and you know, she used to be our operations manager, when we had our big offices in Orange County, California. And Karen used to book my I travel for me. Well, you know what I realized as good as Karen is, it’s easier for me to just do it myself. I just you don’t need to have a middleman for some of this stuff. Sometimes it’s just easier to do it yourself. So, anyway, that’s my thing on self management. Okay, Adam, go ahead. Sorry,

Adam Schroeder 15:16
in relation to that. So what happened? The one that really spawned This was they did the home inspection on one of our properties. They emailed it to me on May 29. Aaron, and I looked at it, Aaron’s my wife, we looked at it that night, we responded on the 30th. And then she said, they would reach out and get some more photos that day, she sent it on the 30th. And then on June 26, I emailed them and said, Hey, I haven’t heard anything, and I wanted to check in and they didn’t respond. And on July 13, I emailed them, and I copied Oliver actually my investment counselor because they tend to respond more whenever I include him. And on July 13, and then July 17, Oliver sent an email saying, Hey, what’s going on? And then she responded To that she responded to Oliver once he got involved. And so it went from May 29 to July 17. Just isn’t that ridiculous just to get simplest thing, just to get painters of this right of the damage? So my question is, as I’m considering the possibility and as I’m, we’re probably going to go into self management in that market. What information do I need to get from the current property manager to be ready for the switch? Do I need to get anything from them? The first thing is,

Jason Hartman 16:28
everybody should always have a library of pictures on every property they own. Okay, you always need that because every time you remark at the property, you need that and just your property manager should just give you a complete file. Now, some of the stuff they’re gonna say they can’t give you because of the tenants privacy. And this is another battle you don’t have to engage in if you self manage. You know, there are laws of course protecting the tenants privacy, but if you take the middleman out and you manage your own properties. You hold those documents. Now you got to be respectful of all that, of course, but that’s a separate issue. But we’ve had cases, maybe like once or twice, I remember this coming up out of thousands of deals where the tenant will owe the landlord money at the end of the lease, right? They all either have some damages to the property or, you know, maybe they’ve had an eviction or something, right. And the landlord wants to pursue a judgment against the tenant. But the property manager will say, well, we can’t provide you a copy of their application and credit report, because that violates our obligation to the tenants privacy, right? Well, if you don’t have a manager and you’re the manager, you have that. So if you need to get that information for a collection agency, you got it, right. There’s no battle. It just amazes me how lame some of These managers are sometimes in Listen, they’re not all lame, okay? I know I make it sound like they are by the way I talk. You know why? Because I don’t point out all the good things they do and that’s not fair. Okay, I will be the first to admit they do a lot of good things. They do a lot of stuff right. But that’s not what we’re talking about. Remember, I’m a complainer. Okay and complainers change the world. There’s a Jason Hartman quote, Gandhi was a complainer Martin Luther King was a complainer Rosa Parks was a complainer complainers change the world. That’s my excuse for being a complainer. I don’t know if it works but so you need to get a complete file. And you need to have a full library of pictures on all your properties. Okay, always keep that nicely organized on your computer. So whenever you have the property go up for lease. And then you can also I want to remind you all you can use a service called we go look.com we go look calm, interviewed them on the show before you might remember the app. episode where I had the the CEO of we go look calm on. And for 69 bucks, they’ll go look at things take multiple pictures report on things for you super handy service or remote management. So is there something in particular you’re thinking besides just a complete file on the property?

Adam Schroeder 19:18
I mean, if it was pictures and kind of what kind of paperwork I can actually get from the property manager, like, I had to ask, I realized after meet the Masters that I didn’t have the actual lease, signed lease from the tenant, so I got right. But I didn’t know where to get all that. Yeah, I didn’t know if there are any other things that I wasn’t thinking of that I needed to get from them. So you’re saying there’s a chance I could get the application but, you know,

Jason Hartman 19:41
they may. They may, I don’t know, you know, just see what they’re gonna say. But you tell them you want a complete file. And you know, everything. I mean, you know, you have the right to it. They may bring up the privacy thing a little bit. They may object to some of that stuff, but what I would say is luck. If they do that, just say, Okay, if there’s something you can’t show me, then I want a redacted application, if you need to take something off of that and redact it for tenant privacy purposes that you can’t give to me, then send me the application redacted, just blacked out the information that I can’t see.

Adam Schroeder 20:18
Okay. And then after we’re switching, I’m assuming I should send a letter or an email to the actual tenant to say, hey, you’re going to be in contact with me, what I’ll do I need to give them or what else should I give them,

Jason Hartman 20:32
you don’t really need to give them anything except tell them where to send the rent. And you know, I would just exchange contact information with him, you’re going to find that most of these tenants are just decent people, and they want to maintain a nice relationship with you. And you’re going to find that everything’s going to be great. And you’re going to find that a lot of them do a lot of the repair work for you for free. So that’s nice to so

Adam Schroeder 20:54
Okay, and so whenever you have to sign a new rent contract, where do you find like the contracts and all of the things you’re going to need to either read the current tenant or to find a new tenant.

Jason Hartman 21:06
Yeah, yeah, good question. So you can either get them from a property manager or a real estate agent in that local area. And by the way, these go state by state, but, you know, if it’s in Memphis, even the property manager you’re leaving, you can get it from them. Okay? Because, you know, a good way to sort of change that relationship rather than end that relationship is to say to them, Look, I still need all a carte services. When the tenant turns between tenants. I need you to handle that for me. How much will you charge me? and some will say we don’t do that. You know, they don’t do all a cart or unbundled services, but a lot of them do it. Okay. So you can find a property manager that does it or you can have a real estate agent do it. And the real estate agents and property managers have access to the form library with all The different forms and documents now, that’s one place. Okay, that’s a good place to get this stuff. But you can also go to places like Nolo Nolo press, no low calm and oh, calm. I think, you know, I mean, that may not be their exact website, but I think it’s probably no low calm. They have a lot of great books on property management. And they have a form library on their site. You can buy forms there, you know, you could buy them on amazon.com. stationery stores sell generic forms, you can get them at places like rocket lawyer.com. There are zillions of places these forms are not a big deal. Okay, it’s just not a big deal.

Adam Schroeder 22:42
And so if they don’t do all the card services, or if I’m not interested in having them do it to say, what’s the best way to find an agent that will actually know what they’re doing?

Jason Hartman 22:52
Well, yeah, know what they’re doing is a whole Good question. Because most of them don’t know what they’re doing. But you know, What happens when you use all a CART services is there’s always a little bit of attention because you’re always automatically dangling a little carrot in front of them, because they want to get your business. You know, if it’s a real estate agent that doesn’t do property management, they want to form a relationship with you. Because, you know, the likelihood is with most people, you know, in five years, you’re gonna sell that property or three years, you know, or you might refer them to someone, or you might want to buy another investment property in the area, you know, so they always know that there’s maybe some future business coming right with a real estate agent. With a property manager. It’s kind of the same thing. They want to get your property management account. So you can go and you can find property managers, you can look at Yelp and read reviews and stuff. Like I’ve said before, I just want to caution everybody, that one of the challenges with property managers is the conflict of interest problem. You know, there’s an old saying you can’t serve too. masters, you can’t serve two masters, you can only serve one. So a property manager might have bad Yelp reviews. But that might be because they’re strict with the tenants and the tenants hate that. So actually reading and looking at the reviews is important. So you know, you got to sift through them. I mean, you know, you can’t believe anything you read online, but it’s better than nothing, right, it’s a guide, and get a referral, you know, get a referral from your investment counselor at our company, get a referral from other investors that you meet at our events. Those are good ways to so there’s lots of ways to do it. I just think that the type of relationship you get into with a full fledged property management agreement, unless the property manager is really good, some of them are really good, most or mediocre and some of them just suck. Okay, let’s face it. Is that even if they’re really good or mediocre, you know, they get complacent, you know, with property management, it’s like you have a contract, you’re stuck with them. Right? You know, where is if it’s an all a cart service, you know, you’re not stuck with them. And everybody just views the relationship differently. Okay. You know, I’ll give you an example, in traditional real estate, like I used to be in traditional real estate for many years, right? The agents that had really long listing agreements, when someone wanted to sell their house, and if they gave me a really long listing agreement, I’m gonna be a little more complacent about that. I hate to say it, right. It’s just human nature, because you have time the listings not going to expire, you know, the seller is locked up, they’ve committed to you for X amount of time. If the listing agreements short, you know, it motivates them to work a little harder now, you don’t want to make it too short, that they’re going to think I’m probably not going to sell this house anyway. right because just not enough time. So you know, Whatever happens happens, but there’s a happy medium there in that relationship, right?

Adam Schroeder 26:05
Does that answer it? Yeah, I think so. So what kind of fees? Should I expect? I expect the general fee that I’m currently paying my property manager, which is like half a month’s rent.

Jason Hartman 26:13
Yeah, it varies by area. So some areas, the properties go into the multiple listing service the MLS, and in some areas, they don’t, okay. So it depends. And in some areas, the MLS fee to the CO broker or the agent that brings in the tenant, if they’re co brokering the deal will be 3% of the lease term. So how that works is an example of say the property’s about 800 bucks a month, just as an example, right? Because I’m making it around number that’ll be about $10,000 a year if it’s a one year lease, right? 3% would be $300. Okay, that each agent would get 600 total, okay, that they’d split, but it’s probably not Not gonna be that on that low of a rent. So it might be half a month’s rent, it might be 75% of the first month’s rent, it might be one month’s rent, okay? Or it might be a different scheme altogether, like I mentioned with the MLS. Now, here’s the thing. You could make an agreement with a real estate agent, or a property manager, but maybe even more likely a real estate agent that says, Look, I’ll do all the marketing, don’t worry about it. And you go list the property on postlets. You’ve got the pictures, you’ve got beautiful pictures of your houses, and you put it online and you list it yourself. And maybe you set up an email address, okay, that’s a special email address. That’s like Adams Memphis properties calm or something like that, right. And this email address forwards to you to your regular email address and to whatever real estate agent or property managers address, you put that address on your postlets account, your Zillow account, whatever, Craigslist, if you put it there. And then every time a lead comes in every time a tenant says they’re interested in that property, a prospective tenant, you both get the email. And you both see how many leads are coming through. And you know, a lot of these sites have dashboards on the back end, where you can look there, and so forth. And it’s just a whole different relationship, when you see what’s going on. And you have some control over that relationship. And you know what, when I’ve done this, it motivates the property manager, because, you know, I say to them, hey, look, we got a dozen inquiries last week. What happened to all those prospective tenants, you know, it’s just a whole different dynamic, Adam. It’s great. It’s great. Get a little control of this relationship. And this doesn’t take a lot of time. It’s just Really, it’s like, hey, should I call someone into my office to dictate an email to them or just right at myself right

Adam Schroeder 29:07
now getting into insurance? I think right now, the way our insurance is set up is we’re on a master policy with the property manager, a rugged, individual policies or lumping together for a commercial.

Jason Hartman 29:23
That’s a toughy. Okay, so probably the individual policies are going to be better. Okay, probably the I’m not an insurance expert. Okay, but I just know how I got burned. And another one of our clients got burned by that affinity group management. They also go by in whatever national real estate Insurance Group and are you however that is ci or whatever? Big, you know, national real estate Insurance Group and now I think they’re under Rei guard or something like that. I’m don’t quote me on this because I’m not sure but they’re using it. All these different names out there. And I know that there have been many complaints about them, and they burned me, they wouldn’t pay a claim that I had. I know that they wouldn’t pay one of our other clients claims to. And this was one of these very inexpensive insurances and insurance policies, where they would insure your whole portfolio properties, they wouldn’t charge you much at all. But then when the claims, you know, when it was time to make a claim, you know, they got a million excuses not to pay you. And that was really annoying. individual insurance is probably going to be better. But again, insurance has become a bit complicated, and I’m not an expert. Now, we’ve had at Baptists on the show before, he’s been at several of our events, you know, he’s insured a lot of our clients properties over the years and you know, he’s kind of talked about the difference between that and just look for those past episodes about insurance. Maybe go to Jason hartman.com, and just type in insurance, and you’ll see them Come up, because there’s a lot more detail there.

Adam Schroeder 31:02
Now I know you’re a huge fan of pet rent.

Jason Hartman 31:04
Yep. D and I’m a huge fan of pets too. I love animals. But they got to pay their way.

Adam Schroeder 31:10
Do you currently charge pet rent for your? Oh, yeah. What have you found is a reasonable amount? 25 bucks per pet.

Jason Hartman 31:17
Okay. Yeah. So if they if they’ve got two cats, you know, you might make them a better deal, you know, maybe make it 44 two or 25 or one, you know, 25 bucks a month. I mean, look, folks, every institutional landlord is charging pet rent. Why aren’t we doing it? institutional landlords, in other words that own big apartment complexes. And also, you know, these Wall Street firms, you know, private equity groups that own all these thousands of houses that they’re renting. They nickel and dime people for everything. Okay, folks, you should be nickel and diming a little bit. You know, it’s the way it is in the marketplace. If they can charge it, you can charge it. It’s much nicer to live in on a single family. home that crummy apartment building. So why can’t we charge that stuff too just like they are. And mostly it’s at the single family home landlords just aren’t asking for it. Just ask for it. You’ll be surprised how often you get it. This will be continued on the next episode. Thank you for listening and happy investing. 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 heart and 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 anything. episodes. We look forward to seeing you on the next episode.

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Jason Hartman does a client case study with Drew. Drew started self-managing 6 homes in the Indianapolis market. He talks about the extra cash flow as a result. Drew also explains how great his landlord-tenant relations have been since self-managing. He goes into the software he uses and talks about how much time he spends managing each property.

Investor 0:00
Give some other people who might be on the fence out there, it took me a while to, to buy into the concept of buying out of state. And that’s really one of the things that I really attribute to you guys, you know, you all the podcasts and then working with all over extensively in the beginning just kind of working through that and how the numbers worked and the comfort level of it. But you know, one of the things that I think Oliver did the best for me is after talking extensively with him, I think he might have paired me up with you know, like almost like a match calm, like he paired me up with the perfect local market specialist to fit my personality and my my investment philosophy. And so I kind of attribute it to him, but I’m very, very happy with the way the transactions go and the way the interactions kind of all fluidly occur with you know, with me and Oliver and the local market specialist and just you know, it really has been a pretty seamless process.

Announcer 0:59
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 1:49
Hey, welcome, and thank you so much for joining me today. This is your host Jason Hartman with Episode 1051 1051. I’ve got a returning guest today one of our clients Who has been very faithful guinea pig for you. And for all the rest of us. He’s a guinea pig for me. And we appreciate him conducting his own laboratory experiment just for us. And that is Drew Baker. Welcome back. Drew. How are you? Hey, Jason, thanks for having me back. It’s good to have you on and now that you’re on again, you will probably receive a nasty email from my troll. And he’s gonna tell you what a bad person I am. But the thing is, you already know what a bad person I am. So probably nothing new. Right? Yeah,

Drew Baker 2:33
he might call me a guinea pig.

Jason Hartman 2:35
Yeah. That’s right. a guinea pig. Exactly. All right. Well, hey, you have been telling me the exciting story of your self management experience with your properties. And I’m really glad you took this on. I think you are. You’re kind of the perfect person to really test it now. Did you convert your whole portfolio to self management or do you still have managers on any of your property at all,

Drew Baker 3:00
no. So I only converted one of my markets, which is the market of Indianapolis that has the most majority of my real estate holdings. Okay, other market? I haven’t pulled the plug yet

Jason Hartman 3:11
because you also you also Memphis, right? Yeah. Well, I haven’t I haven’t decided that just because I don’t have a local real estate agent there. I haven’t dug in and tried to find somebody. So basically, once I have the proof in the pudding here in the market, I’ve gotten running, I will then jump over once these are all coming along, you know. So, basically, if you looked at my portfolio, I was having trouble with getting these leases renewed getting rents raised just basic things, which is a struggle, right, right. And that should not be a struggle. This basic stuff should be simple. And you know, once again, sometimes when you put a third party in the middle, things get harder, not easier. The third party to my thinking is supposed to make your life They’re supposed to serve you, you’re paying them. But it doesn’t always work that way. And sometimes it’s not even because that third party in the middle, in this case, the property manager is bad. It’s just the nature of the way things sort of work. So now tell us more.

Drew Baker 4:16
Yeah. Well, I mean, I think the other thing, too, that was interesting is, you know, when they’re managing, you know, hundreds or thousands of properties, and you’re managing six, you know, you just can obviously pay way more attention. But I think the problem is, is that a lot of my tenants were upset because the property management company wasn’t following the lease agreement terms. And they weren’t doing their part. And on my end, they weren’t following their obligations in terms of like, stuff that was going to go month to month. I was supposed to get more money if it went month to month because they didn’t bother to renew the leases. And I wasn’t getting any more and they weren’t following their own lease on either side of contracts. And both of us were frustrated for different reasons. And one example I’ll give you is one of my tenants had a back door that was rotting out and was causing a draft in their house. And they were frustrated. And the property manager said, this is a cosmetic issue, we’re not going to deal with it. So I got a picture of the door and I’m like, come on, this is not a cosmetic issue. So I went in there and basically spent I decided all these properties I’ve had for, I don’t know, eight years or so they all kind of need a facelift. And I can go in there and with a tenant thinks I’m a hero, and I’m doing a rent ready basically with them still in place, and able to go in there and give them what they want. And so basically, I approached it from two ways, like I want to do the mandatory repairs that are needed. And then hey, you know what this house is getting to be 18 years old or something. It needs a little bit of a facelift. Why don’t we put $500 in new lights, new fans new you know basic stuff. I mean, what’s that’s kind of the approach that I took. And what was nice about it is like Costco, calm Amazon. All that stuff now is like, super so treated. Yeah. Right. It’s so cheap. Yeah. So that’s kind of the way I approached it. And by spending, you know, an extra 500 bucks, hey, look, this remote on the fan is really nice, we can turn the light off without having to get up or you know, whatever. So that’s kind of how I approached it to start.

Jason Hartman 6:28
Okay, so your tenants are now happier. They look at you as the hero, the man on the white horse, so to speak, and you’ve come in and you’ve given them a better lifestyle. So the tenants are happy. But is this only because you are spending more money and reducing your return on investment? I mean, admittedly, though, spending more money sometimes is the best return on investment because you know, you’re making capital improvements and so forth. But in this case, you’re actually still ahead financially. I believe that’s kind of what you were alluding to when you mentioned that to me, but tell us the story about the money side.

Drew Baker 7:05
Yeah, I mean, I guess I see the tenant as my customer. And if I’m not doing anything to make the place nicer, I feel really awkward about asking for a rent increase when it comes time to renew. So if there’s ways to make the players feel safer, they’ll want to stay longer. And, you know, I had a tenant that stayed for just a few months and then broke the lease because they wanted to buy a house. And still to like, just get the place rent ready was really costly. I mean, even though you know, they had four people or four kids and you know, to adults, but just keeping people in there is really important. One of the places that I had a neighborhood boy had broken into a couple of homes in the neighborhood, and they just felt unsafe. So I said, Hey, why don’t I put a motion light in the backyard? That’s LED and it can be, you know, cost me $35 right Yeah, it’s not a huge deal. And this is something that’s, you know, a crusty fixture that was there before that was really rusted out and look nasty. And to me, I see this by putting the money into the house. I see it taking money out of my left pocket and putting it in my right. Yeah. Okay, good, like impacting my cat. Got it.

Jason Hartman 8:20
Got it. Got it. Okay, but tell us about the money. So you save when you switched and got rid of all your property managers, you you saved the money on the management fees. So yeah,

Drew Baker 8:33
yeah. Alright. So when these people last, when the property management company was was like, Oh, I approached all the tenants who were must a month that hadn’t had rent increases for a while and I told them I was taking over. I was going to do some improvements. I needed to get them on a lease. And since they hadn’t renewed for several years or had an increase, there was going to be an increase. So I went across the board to have the properties already had. I’m talking about six properties. Just see No. So two of the properties were locked in a lease, I couldn’t do anything as far as a rent increase. But that was fine. Because those people had been there for a while. And we’re going to be there for a couple more years. So I was able to raise the rent on on four of the places. And so it’s pretty dramatic, because between all four places, I raised the rent $425. Okay, between four places? And if so,

Jason Hartman 9:25
wait, wait, wait. So more than $100 a piece on average $425 increase on on just four properties use it?

Drew Baker 9:34
Yes. Well, the thing is, is that my property manager was kept dropping the rent to try to get someone in there. And the problem was, is they just weren’t following up with people. So it was just like the most persistent person was getting the property. And they were just lowering the rents on my end because they weren’t following up with these people. The combination of that and the fact that rents have gone up in the area that I’m in so if you take that $425 and then between six of my properties, I’d say probably one or two every month are coming in a couple days late on rent. Somebody got injured in the house and they are they’re struggling to just make ends meet. And so you don’t you don’t mean they got injured in the house like liability? No, no, no, no, no, no, I’m saying like they got injured at work, or they’re, they’re on maternity leave or something that some life circumstance Yeah, good. Good distinction. So if you combined the late fees that I would otherwise have to relinquish or maybe keep 50% of. Now I’m up to $600.

Jason Hartman 10:38
Yeah, what is it? Okay, more per property. Okay, so wait, wait, wait, wait, wait, let’s talk about this. So one of the things I proposed and you people that have been listening to me for a long time, the brilliant ones among you, thank you. One of the things I proposed at our meet the Masters event several years ago, and it was not adopted by any property manager that I Whereas they might have done it and mine I’m I might not be aware of it, but I doubt they did I think I know is I proposed this idea of the flat fee management. So there is a serious alignment of interest between the property manager and the owner. And the property manager does not become predatory on the tenants. See, one of the reasons, I believe, I mean, this is not new information for regular listeners, but you know, anybody that’s new or doesn’t remember me saying this, one of the reasons I believe your turnover rate is higher than it should be. Possibly, this doesn’t apply to all of you. But if you think your turnover rate on your properties is higher than it should be, examine that the property manager may be charging that tenant late fees a lot. And the idea that the property manager would keep the late fees or keep any part of the late fees beyond just a small percentage of eight to 10%, for example, makes the management predatory on the tenant. And that doesn’t make for a good relationship. Okay. Look, the tenant again, like you said, Drew, thank you for saying it again. The tenants are our customers, they are our customers. We want to make our customers happy. We don’t want to treat them like babies. We don’t want to take advantage of them. We want to keep them happy. We want to make the relationship Win win. And yeah, you know, I hear many investors, the way they talk about their tenants is like degrading. I mean, do you think any store talks about their customers that way? No, these attempts are our customers. We got to treat them like customers, right? Yeah,

Drew Baker 12:37
yeah. And I mean, the way I approached it is when I took over the portfolio, the first couple months, anyone that hadn’t paid on time, as a courtesy, you know, one or two days before late fee was going to kick in, I would say, Hey, I’m not going to like ride you or anything but just want to give you a courtesy that you know the system is going to charge you a late fee on in the next day. If the rents not received Yeah, and most of the tenants were happy about that. And I made it clear to them. I don’t want the late fee. I mean, for their sake, just because I think that it is predatory, but it’s there to protect

Jason Hartman 13:10
gotta protect. Sure. Yeah, yeah, yeah, we’ll protect the landlord. But wait, when you say you told them that, how did you do it? Did you email them? Did you call them what I mean, these properties 2000 miles from where you live. So

Drew Baker 13:21
the mode of conversation between basically all of my tenants is by text message, that kind of how it’s come. And not that I picked that by choice, because I actually became familiar with a portal system to use. But I think it was easier for tenants to text me photos of maintenance stuff they need to know. Yeah, yeah. Yeah. Yeah. So we have done email and other stuff. But that’s been the primary mode of communication. But now that I’ve established to them like, hey, he sent me reminders just early on. I’m not going to do it every month, but that I’ve basically established that I’m not trying to take advantage of them. I think it’s now It’s something where it’s their responsibility, so I’m not gonna babysit them. But that’s the way I approached it. And, you know, one of the tenants called me and said, after I had reminders and said, Hey, you know, my, this life circumstance happened, we’ll pay part now and part in the middle of the month, and we’ll still pay the late fee, but they were very sincere, I’d built a rapport with them. They were very transparent about what was going on with them. And I was okay with whatever, you know, we had come to the agreement of but

Jason Hartman 14:28
as long as you don’t like that a regular occurrence, you know, you do like a one time thing. I mean, look, every everybody listening has been late on paying some bill at some point in their life, right. I know, I certainly have, you know, when you call that creditor, if you were out of town, and you didn’t pay your credit card or your, you know, electric or your mortgage or whatever, they will waive a late fee as a courtesy one or maybe two times. Okay. So yeah, they’ll tell you, they’ll tell you where to walk. One time thing, you know, we did, we’re not going to do it again. So just understand there are boundaries, right?

Drew Baker 15:05
Yeah, exactly. Yeah. And in this particular circumstance, it was a legitimate thing. And I did not waive the late fee. But you know, if it’s like a day late, I mean, the way I do it is I’ve set up this portfolio, you know, portal system. That’s what I wanted to ask you about. So you’re using what, William right. Yeah, I’m using building and so I basically called them and they helped train me and how to use the system. I put all the properties in there and what the lease dates were and, you know, whether they were month to month, and then if a new lease is executed, let me let me talk about this for a moment because we did have when we had you on the show before you said you were using that

Jason Hartman 15:41
now, listeners, building them is a property management software system that is usually used by property managers, okay, not by sort of mom and pop property owners, okay. It’s a system that, you know, you could have thousands of properties in in the billions system and it has a web based portal where the tenants can interact with it on the internet. Can they pay their rent on bill Diem Drew, I know they can cozy and we’ve had a few times

Drew Baker 16:12
you make a one time to enroll in their e pay they call it I think it’s like $99 as a one time fee and then every time someone pays by the AC h transfer for the you know, through their bank account, there’s a 50 cent charge and they allow as a convenience fee they allow the landlord to charge any convenience fee amount they want. I think mine is like $1 95 Well, you could

Jason Hartman 16:39
make that a little bit of a profit center. You know, I bet a lot of tenants would be more than happy to pay 16 bucks

Drew Baker 16:46
for that convenience. No, I’ve seen I’ve seen some that are three some that are five. So I think it I don’t know what the average is, but I don’t want to gouge them and I actually let them pay through like four different methods. So you know either by depositing the funds in my bank account by going to the branch by sending a cashier’s check right? or pain through zelly which is or I believe psalms l e LL. It’s an interbank transfer system that all major banks have adopted to transfer instantly between all of them, right. So that one and then pay through the portal. And then what’s nice is it keeps track of all the accounting. So if I have to add in utility bills that I pay and pass on to them, because sometimes like with water, when the bills attached to the home, I don’t want to let it get crazy if they don’t pay it, and then there’s a lien so it kind of gives me a pulse on it. So like I manage that side, and then I’ll build onto them, and I can classify it as a utility income. So it really makes the accounting side a lot easier, just at the end and see who’s outstanding, and try to keep track of it on some crazy spreadsheet right now.

Jason Hartman 17:53
What everybody’s probably wondering, is has this become your day job, you know, managing these six months properties as a self manager, and you’ve got more properties, but you’re only doing six on self management so far, or is this pretty easy? I mean, you know, how much time are you spending on this. And what I want you to really speak to, though, is this is the way to truly compare something, the results you have now, versus the results you had with property managers, and the Delta, the difference between the amount of time they’re spending on each, for example, you know, if you spent four hours a month dealing with the management of the properties when you had property managers, and you spend six hours a month now, the delta is two hours more is that’s what you’re spending. So I don’t know, maybe you’re spending less time oddly, in counter-intuitively, like I’ve mentioned, I find that some of the self managed properties actually take a less time than having a manager because you don’t have any conflicts of interest. You just clean it right up.

Drew Baker 18:57
Yeah, I mean, it’s probably a combination of both Some properties are easier, some are more difficult. And it really depends on what state they were left in. And I don’t really consider me getting everything running in terms of just getting everything up to snuff that’s set as a indication for how it’s going to be in the future. I don’t see that I think of it more right now that I’m kind of cleaning up the room that was given to me. So, but I mean, the numbers don’t lie. I mentioned to you that my increase in rents was $425 a month six properties, you know, I’m keeping close to $180 a month in late fees. And then if you talk about what my target rent is, and how much I’m saving compared to 8%, that I would normally be paying a manager, that’s $750 that I’m saving every month, that when you combined all three of those totals, you’re talking 1300 and $50, which is okay, so you

Jason Hartman 19:53
have you have literally increased your cash flow on each property by over $200 dollars a month by self managing, wow.

Drew Baker 20:03
Yeah. And if you add the median of all what’s nice too is that added, like, if you take whatever my average rents are, let’s say it’s about 1200 dollars 1350, I’m getting more in money between these six rentals than an additional rental property thing. That’s the thing that’s funny about it is this is a rental property quote, unquote, if you want to think of it that way that has no expenses. So that increase in income is just something that’s sitting there, you know, untouched, I don’t have to pay property taxes or anything like that extra amount of money that I’m getting, it’s just free flowing cash flow.

Jason Hartman 20:39
So basically, you have increased your income by the same amount as owning like being given for free. Actually, more more than that. Yeah. On our typical

Drew Baker 20:52
like to rental property if,

Jason Hartman 20:54
yeah, if someone gave you for free, a rental property, and it was free and clear. That’s how much you’ve increased your income by becoming a self manager of only half of your portfolio.

Drew Baker 21:07
Wow. It’s even more dramatic than that, because I found it I don’t you might have different a different feeling of that is if you have a house, it’s paid off in cash. When you take all the fees and maintenance and everything I think about 50% goes to property taxes, you know, agents, just 50% goes and flies out just for upkeep, right? If you own the home and you don’t have a note on it, so Well, I don’t think it’s 5050 waiver 60% of what I don’t it’s not that high 50% 50% of your of your monthly rent, I think goes to maintenance and repairs and in property taxes. And, you know,

Jason Hartman 21:47
if you’re if you’re in really high property tax areas, that could be true, but I don’t think that’s normally true, you know, normal tax area. Like if you’re in Texas where you’ve got really high property taxes for example, but No, Texas has other benefits for sure. Then what I

Drew Baker 22:04
want to talk about, I think this is my thought on it. Okay. I think by on average two months of your rent that you get, I know it varies per area, but about two months of the annual rent will go towards property taxes, I find that’s usually fairly accurate. Now, if you buy in Texas or you buy in California, not that you would ever do that, but that might vary. But by and large, about two months ago to the property taxes, I figure about one month goes to maintenance, which I’m obviously not, I’m having more control over. Maybe one month goes to like, a rent ready repair and then one month might be vacancy, and then the next month might be having the 8% in the management fee or like or a lease renewal or a contract

Jason Hartman 22:51
you know, I don’t know that is you know, that’s kind of complicated. You just look at go to Jason Hartman calm and look at the performance you know, that’s it depends where the property is. And we could get in the weeds on that one. But I don’t want to confuse the issue. But the real issue here is though, the self management, okay, so if you take out the setup, the initial sort of setup of getting your portfolio organized, setting up the building software, by the way, and you probably mentioned this before, when you talked about it on the show previously, but how much does the building software cost? Because you’re like a little tiny customer for them. They have big giant customers that are big property management companies. What does that cost you? Do they have a little?

Drew Baker 23:31
I think it’s $45 a month, it’s very inexpensive.

Jason Hartman 23:35
Okay, so $45 a month for the building. Okay. And how did you choose that one? Why did you choose building? Well, you know, I looked at all the other property management software companies such as like AppFolio and property where I think we’re a couple of them.

Drew Baker 23:52
Yeah, and those required a lot more upfront cost. And, you know, they kind of wanted to target somebody that was big. than me. So I thought this was the right fit, in terms of it was accomplishing what I wanted to, and there was no upfront fees really. And it was very simple to set up, you know, and by the way, you know, you get all this training, they want to help you catch up to speed. I talked to one of the training people there who, like, you know, help you through showing you how it works. And I said, like, hey, how am I doing? It’s been one month, and they said, Oh, it takes usually people two or three months to kind of get everything down. But I think it took me about a month to just be comfortable and have it be churning, and I’m not somebody that’s gonna go in there and do all my own accounting and all that stuff. I thought it was very simple setup. Anybody could really do it if you just gave it a little bit of time and you know, they’ll hold your hand.

Jason Hartman 24:47
Okay, so the question remains, take out the setup if you can, and just talk about the normal monthly ongoing self management of your properties. Once you’re set up with Bill Diem and I mean, you really did it professionally, Drew, I gotta compliment you. You know, using building is something that most people won’t do. And by the way, I know everybody listening is probably thinking, well, Jason, you recommend property tracker? Well, property tracker doesn’t do all of the stuff building him does. Property tracker will evaluate the investment quality, okay? And it will track a lot of things. But it doesn’t do rent collection, it doesn’t do some of the things this does, it doesn’t manage, like repair requests and things like that. This does a lot more. This does, like real management, whereas property tracker is more like just keeping track of it. Okay, so anyway, there’s a little difference there. But

Drew Baker 25:41
let’s talk a little bit. The thing is, it’s a little bit daunting, if you want to try to do everything it does. I mean, I certainly just you don’t narrow scope everything. Yeah. No, I mean, I, you know, I think most of it is pretty narrow, narrowly defined on what I’m doing, but it’s not. It can do as much as you really want it to Do so that’s what’s nice. Okay.

Jason Hartman 26:02
All right. Okay, so how much time?

Drew Baker 26:04
How much time does it take? Oh, I would say probably each property is an hour a month or less?

Jason Hartman 26:10
And that’s, yeah, yeah, yeah. So that’s what I’ve been saying for 14 years, allow one hour per month per property. Most people don’t even spend that much. But as soon as they have a problem, they think, Oh, my God, I’m spending all this time, you know, blah, blah, blah, but an hour a month per property on average, I think is a very realistic estimate. And that’s self managing. Right?

Drew Baker 26:32
Yeah. And I will say that the one difference in time would be if I have a vacancy, so if somebody’s leaving, and I have to get the place around ready, I would say to do that whole process. And I know it’s probably depends on how the property is but you know, maybe five hours would be my guess and coordinating, you know, having the AC maintenance done and just kind of just calling companies and you know, trying to get things down to But the agreement that I have with my agent is that she’ll go through the property, she’ll make a checklist. I hand that over to the maintenance person. He tells me everything you can and can’t do anything he can’t do. I’ll call the eight track company or a lot of it to it, just like the ducks were really dusty in the homes. They hadn’t been cleaned in 20 years. And so I basically whenever I maintenance guy goes there, I say, hey, look at the docks, you know if they’re just disgusting. It’s going to be a maintenance issue down the road. Of course, talking about air ducts, not duck stick quack. Okay. Yeah. Yeah, so stuff like that, like a property manager would never Yeah, that’s

Jason Hartman 27:40
right. Yeah, you’re providing a better quality home to your tenants. And that means that long term, you’re gonna have less turnover, you’re gonna have higher rents, you’re gonna have happier tenants. And life is going to be wonderful. So yeah,

Drew Baker 27:56
good, good stuff. I mean, well, the thing is, is that I mean with this recent property that came vacant, my agent, the tenant left before the end of the month. And then in 10 and 10 days, I was able to get the unit rent ready and rented with zero vacancy loss. Yeah, well, I mean, it’s a well oiled machine. Yeah, compared to this bureaucratic, I feel guilty checking in once a week to see if anything’s changed. And I mean, to the point that when I was calling the property management companies, I felt like they were using the same emails that I sent the week before. And it was right. It was just the checks in the mail version of we’re doing something but you know, everything seemed through the filter of their best case scenario because they’re presenting information.

Jason Hartman 28:42
Yep. The other thing we haven’t mentioned this time, although we’ve talked about it before, is that the tenant does a lot of the work for you in maintaining your property. They will meet the repair people they will meet the maintenance people they will do the maintenance themselves, like my mom has talked about with her property. She always likes to get a tenant, that’s handy, you know, and can fix things. And a lot of times they just improve your house for you. They view it as like this pride of ownership and that the distinction is and it’s not the property managers fault that it’s this way, it’s just the nature of the way the dynamics of the human relationship work. Right. You know, when they have a relationship with you, they know, hey, it’s, it’s drew and Katie on this house, it’s those are real people to me, right? If I’m your tenant, versus some institutional company that every time you know, they see a little ant crawl across the kitchen counter, they call and say send an exterminator, you know, it’s, yeah,

Drew Baker 29:40
yeah, the perfect way to describe it is if you go to your friend’s house and use the bathroom, you’re probably going to treat it a little bit different than if you go to a public park and try to use a community, you know, bathroom, right, it’s a mess. So by having it have some personal touch to it, and not have it be this impersonal, you know, thing that you’re just basically Feeding money to, there’s nothing there for the tenant to want to treat it as with respect, but if it’s yours, they’re going to be a little bit more, you know, willing and things that the tenants asked for, like 110 and asked for some screens on the house because none of the properties, not the property didn’t have screens. And after I’d gone in there and done a few things for them, they said, You know what, don’t worry about the screens. We don’t need those, you know. And so it’s like when it became personal, and they saw that it was going to cost me money to do they’re like, Don’t Don’t worry about it.

Jason Hartman 30:30
You might be surprised when that tenant moves out. You might have screens that they paid for you. You’ll be surprised. I mean, you really will. Yeah, absolutely. Drew, we’ve got to wrap it up. Thank you for sharing your story. listeners, I really encourage you to consider self management some many times it’s actually easier than having a property manager. And if you have like I always say if you have a great property manager, just leave it alone. That’s great. But if you have a mediocre or bad property manager, try self made Management, you know, as long as you’re not brand new at this and you have a little experience and, and maybe you, you went on online and you bought a book called property management for dummies, okay? Or one of the Nolo press books, you know we’ve had them on the show, you know what I’m not saying the dummies book is the right one, I’m just making an example. But maybe you bought a book on property management and you you know, you thumb through it, you don’t have to read it and cure your insomnia with it, okay? Because probably pretty boring, but just have it as a reference and look at it, you know, just thumb through it and familiarize yourself you’re just going to be a better person a better investor. If you want to be considered a real estate professional, which is the holy grail of tax benefits that the IRS can bestow upon you. Then self management is really the thing to do because it will help you qualifying to be considered a real estate professional, a professional investor in the eyes of the IRS. If you don’t know what I’m talking about, just go to Jason Hartman calm you. Type real estate professional in the search bar. And I’ve interviewed CPAs on that over the years. And hey, but Drew, I want to mention something before we wrap it up and then leave you with a last word. Okay, first off, be sure to come to our Hawaii events, profits in Paradise, and our venture Alliance retreat in Hawaii first week in November. Those are really going to be awesome events, brand new content, brand new events. We’re going to talk more about short term rentals and compare them to long term rentals at that event. And we’re going to do a bunch of other stuff. We’re going to have some of our local market specialists there with properties you can by also be sure you have added our Alexa skill to your Alexa device. So you can hear the Jason Hartman update every single day on your Alexa device or the Alexa app on your smartphone. And then lastly, the property cast where you can get properties delivered to via RSS feed to your smartphone or computer As soon as they become available, and those are actual property performers, so I like having the hot sheet right there as soon as the properties are posted on our website. So in a inventory, tight, restricted market, like we have, a lot of people really love that property cast. And so that’s just another podcast, whatever podcast platform you’re using, just type Jason Hartman’s property cast, and you’ll find it and make sure you subscribe, and please rate and review it as well, as well as the show too. We’d appreciate that. Drew any last words on self management or anything else you want to talk about?

Drew Baker 33:36
Yeah, I guess one distinction I would make here is when I’m saying all these property managers, I’m talking about them in like guys talking about ex girlfriends or something. I mean, if you have a, if you have a good marriage, don’t change anything, right? But if it’s a mess, just try a change. And the thing that I’ve kind of realized and is foolish is I always felt like if I make To change, it’s going to be so hard to go back or whatever. But change is good. And so I think I would encourage people is that you know, you’re the customer too. And if you leave, there’s plenty of people that want your business. And so if you want to just use that month, just say, hey, let me try it for a month. Yeah, probably manager, I have a mess. Let me try it for a month doesn’t work out. It’s not a big deal. handed over. Yeah, yeah, you can

Jason Hartman 34:25
always go back to a new property manager or the old one. So it’s not like a forever commitment. Just if you don’t like it now, stop self managing.

Drew Baker 34:36
Yeah. And you know, it might be that a couple of properties are real easy to manage. And two of them are hassle and they’re always the same two and maybe you pick which ones you want to self manage, just to kind of learn that skill, and keep your foot you know, dipped in the water. I mean, so like with me, I’m trying to get more involved now in helping with writing the leases so that I know what the terms are and I have some control over that and I don’t have to pay for these renewals because I can write them myself. You know, I build the template and just go off of that. So another way to kind of save a little bit more money and learn a skill and get more involved. So that’s kind of what I’ve been trying to get involved more in now.

Jason Hartman 35:15
Yeah. Good, good stuff. Well, hey, thanks so much for sharing your story. Happy investing to you and all of our listeners. We appreciate everybody and we will talk to you on the next episode. Thanks again, Drew. Sure. 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 heart and Mediacom

Jason Hartman 35:38
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.

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This episode focuses on property management. Jason brings on client Muthian for a client case study. They discuss his journey into real estate and why he has used the network. They also go into issues with property management and where he has been wrong, including actions he’s taken to right the wrongs.

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 Episode 995 995. Guess what, we’ve got a special treat for you with Episode Number 1000 something I’ve never done before. And as there is a thunderstorm out, and it is raining some badly needed rain here. I love storms. You know, it’s like God putting on a show. It is thundering and lightning out there. It’s really cool. But I will give you a clue about Episode 1000 coming up here is the clue for Episode 1000. We’re only five episodes away.

Jason Hartman 1:57
Okay, we better shut that off quickly because you know the copyrights and so forth we have to respect but yes, Episode 1000 will be none other than fabulous. Colby callay right. And that is her most famous song, bubbly. I interviewed her yesterday great interview. She was really awesome and talked about her music career and how she started it in such a unique way online. You know, of course, the music industry is massively changing. So we’ll talk about that as well as how she writes songs and I just love singer songwriters. There’s too few of them nowadays, but it’s a lost art largely, but Coby callay, along with a fairly small number of others in the music industry are still singer songwriters. So it was great to interview her. And as you know, Episode 1000 is a 10th episode show. So we go off topic and we don’t talk about real estate investing per se, but I did ask Colby Kelly what she thought about real estate investing. You can hear her answer five episodes away. Well, actually for after you’re finished, listen to this one right? So, lot going on in the world. First of all the self management revolution property management, getting the middleman out dis intermediation, the power to the investor. Remember, I am a consumer advocate. I am all about the empowered investor empowering you so you can get better returns, have an easier life, make more money with your real estate portfolio and just have it all work better. And that is why we teach people how to self manage because we have done our research. And you know, I’ve been doing this for what 14 years now the nationwide investing thing. And before that I was in traditional real estate as a low information investor for many years before this. Now I am a high information investor, because I not only taught myself when I started getting out of my little sandbox and Southern Cal fornia thinking I was an investor, but really I was a speculator a gambler. You know, I made some money for sure, but could have done a lot better. Had I been a linear market investor and invested for ROI, yield, cash flow, call it what you will, but this is the right way to invest. This is what really being investor is all about. Okay. That’s what it’s all about. So what we have discovered in our research, listen to this, folks, we have discovered that 39.7 2.1 5.17% of all property managers suck. Yeah, they suck. Almost 40% What was that number again? play it back, Mr. Podcast Producer, because I can’t remember what I just said. Obviously, I just made that number up, right? Yes, you know, I made it up. Don’t hold me to the 39 percent ish number of property managers that suck. They suck. And some of them are just downright crooks. And we don’t want you to fall victim to that now. Hey, listen. The question we’ve always got to ask herself is what what question Do we have to ask dear listeners, we have to ask ourselves compared to what? Compared to what compared to Wall Street? Well, Wall Street sucks even more. Yeah, I know I’m talking slang here. But sometimes it makes more impact to talk that way. As Tony Robbins who drops the F word every other sentence, it’s really kind of repulsive. Honestly, Tony, I think we got your point. Yeah. So property managers. They are the Achilles heel of our business. There are some great ones out there. Certainly. Most of them are in between mediocre and lousy. You know what, we just want you to have more control. We believe in direct investing. You cut the middleman out of the game. Think about it in the room. Real Estate game, when we invest for the long term, right? These buy and hold rental properties, the most historically proven asset class in the entire world. We only really have one intermediary, the property manager, and we are drilling down, finding ways to disintermediate them when appropriate when possible. Not always, if you have a good property manager, Hey, keep them they’re fine. They’re great. But if you have one that’s mediocre or lousy, fire them, you’re fired. I think our president said that right. And he said it a lot in his cabinet and endured quite a bit of criticism for it. Some is probably legit, but, you know, sometimes you have to shake things up, drain the swamp, you know, drain the swamp and replace some of the people in the swamp with some other swamp dwellers.

Jason Hartman 6:55
You know, it’s almost impossible not to have swamp dwellers. You know, it’s just it’s just the way political environment works the way the system works, the establishment works. I mean, what is Trump supposed to do? You know, hire people that don’t know their way around the financial system? I don’t even know if that’s really possible to do do that. Right. So I don’t know. A lot of his the criticism against him is warranted, but he definitely deserve some credit haters. You haters need to give him some credit to we have. Do you know, that they believe I heard this on the news yesterday, they believe that the next unemployment report, well, officially, and I know the official statistics aren’t accurate, but it leads we’re comparing apples to apples, right? It’s a benchmark. That’s all it is. It’s kind of like my scale in the bathroom, which I rarely use, and I probably don’t need to use it that much. But you know, when I step on my scale, it’s got those little electrodes in the bottom that shoot some electrical current that I can’t even consciously feel through my body to tell me what my body fat composition is my hydration level and of course my weight and something else tells you something I can’t remember anyway. Oh, you’re like bone mass index or something like that. Anyway, look at that thing is an accurate I know it’s not accurate. I know that the scale in my bathroom that cost 79 bucks and test your body fat is not accurate. I get it. But there are some things you can do to make it a little more accurate like never use it before going to the bathroom. Always go to the bathroom first have an empty bladder and also do it at the same time of day. Do it with clean feet. Clean feet, yes, that will make the scale more accurate. And if you do that, you will have a relatively decent benchmark. Now what does a benchmark do? It tells you the compared to what question it doesn’t compare to dunking your you know letting every ounce of air or I should say cubic inch of air maybe or cubic centimeter that even be better of air out of your lungs and dunking yourself tank of water, it’s very hard to do that that is a more accurate test than my scale. But it’s a benchmark, right? And if we do it at the same time of day in the same way, every day, and we do it over time, we establish a pattern. And that’s what we want to do with our investments. So one of the best decisions I made when I got into this business 14 years ago, okay, is I decided you gotta have a consistent benchmark. And that’s why we use the property tracker software. Go to Jason Hartman calm, click on the resources page, get a hold of it. It’s very handy software. And we use it as a benchmark. If you go to Jason hartman.com slash properties, you will see the performance there static. If you use the software in our subscriber, you get the non static version, right, you can manipulate the numbers change the assumptions, right, but you’ve got to have a benchmark, and so many people in our business are out selling and promoting properties. With no good benchmarking data, right, they don’t impute a real vacancy rate, the numbers change of the assumptions change. How can you evaluate this stuff? You can’t it’s just too hard to evaluate things with fluctuating benchmarks. Okay, you can’t do it, you gotta have benchmarks. So that is a very, very important thing to have a benchmark and abide by the benchmark. So when you come and join us in Philadelphia on May 19, after registering at Jason Hartman comm slash events, or Jason Hartman creating wealth com if you want to get directly there, you will learn how to benchmark better right, and we will play the portfolio builder game that formerly we never did at the creating wealth event. We only did it at the Jason Hartman University event, but that is so popular and people liked it so much. We’re actually adding it to the creating wealth program that we will do together. Other only one time this year, it’s the only one we’ve got planned on May 19, in Philadelphia. So join us go to Jason Hartman. com get registered for that. And today, we’re going to do some complaining, some rather serious complaining now, I want you to ask yourself compared to what? Remember, the other investment choices out there in the marketplace are either may Of course, this does not cover everything. I know there’s more. Either you can invest in this highly speculative stuff like precious metals, or crypto currencies that aren’t backed by anything at all talk about the ultimate fiato. Right. It’s cryptocurrency. You can invest in those things purely speculative, they produce no income, strictly, it’s buy low, sell high. That’s the plan, Stan. Good luck with that one. Lot of people have lost a lot of money with that plan. over the ages right over the millennia. buy low, sell high. Hey, you might be right. And you’ll win, but you might be wrong and you’ll lose and you have no Recovery method. See, we were talking to one of our web development teams today. By the way, they are not a customer of ours, we just hooked up with this company recently. And we would love to be spending this money that we are spending with all these outside vendors in our own ecosystem. So if you have a service that you can provide to us, we’d love to support you and keep it all in the family. You know, nepotism is good, as long as you keep it in the family. Well, I’m talking about our customer family here, right? So go to Jason hartman.com slash ask, and tell us if you’re a blogger or writer, video producer, and audio editor. you specialize in search engine optimization or web design, or are you a programmer? We got a lot of super smart clients out there. If you are looking for some freelance work, let us know we’ll just maybe we won’t do it today, but we’ll keep you in mind and in the future. We’ll do it. So Jason hartman.com slash ask for that. Anyway, talking with Software people today we had a two hour conference call with several people on our team and their team, you know, and we’re on this zoom meeting. And one of the things you always want to try and avoid in business and life with systems of any sort is this concept, right? the fewest points of failure possible. You don’t want a lot of points of failure. The old saying a chain is as strong as its weakest link. So as you apply this to investments, right, what is the weakest link? Well, certainly a weak link for any investment would be for it to be one dimensional, a one dimensional asset class like the speculative things, the precious metals, the non dividend paying stocks, or the crypto currencies, right, those are one dimensional, buy low, sell high, then you’ve got two dimensional well, that includes dividend paying stocks, and it includes other investments that might pay a return to investors a dividend pref rate Whatever. But then you’ve got in most of these things in the vast majority of things, you’ve got intermediary party risk, right? So you want to disintermediate because when you disintermediate, you get more control and you get better returns and you get fewer people with their hand in the cookie jar. Folks, look, commandment number three, thou shalt maintain control of my 10 commandments, that without a doubt resonates with the most people, thou shalt maintain control. Three major problems when you relinquish control, you might be investing with a crook. Allah birdie made off WorldCom you know, I just watched a thing about Bernie Sanders recently. And you know, you got Enron WorldCom global crossing, I mean, the list is like endless, right? All of these right? MF Global, blah, blah, blah, etc, etc. There’s a zillion of them. Then you’ve got the ones who are doing it legally. Right. And they’re, they’re legally putting their hand in the cookie jar and they’re taking some of your money, right? You’ve got these property managers that litigate That I’ve been in with results property management now called Quincy property management, Kansas City, Missouri and now they branched out. They got a big lawsuit from a bunch of their employees for a hotel they own. I mean, these people are taking advantage of people, okay, it’s just wrong. And in all these years of litigation, they still can’t produce any document that clears them. But will you win in court? I mean, who the hell knows it’s a crapshoot. You know, it’s the mood of the judge. You know, the attorneys, technicalities loopholes. You know, I’ve been watching this show maybe you’ve seen it it’s called Better Call Saul. Right. And he’s this kind of sleazy attorney but I don’t know if he’s really sleazy as his character develops. You see, the guy actually seems to be a kind of like me, right? Like a person who’s a fighter for the underdog, which I love that because I used to be an underdog I spent half my life as an underdog whenever I see someone taken advantage of the underdog or bullying someone or you know, and and there’s a lot of financial bullying out there just really bothers me. I want to be a consumer advocate and stick up for them. So you got these intermediaries, and they’re the property managers in our world, they’re the only one. But in a wall street type investment, right? Even if it’s two dimensional, never multi dimensional, like income property, but two dimensional, where you get your profit from buy low, sell high if it works out for you, and maybe you get some dividends along the way, two dimensions of profit, income property, multi dimensional many dimensions of profit, right? At least five. And so you’ve got this. But the one last point of someone with their hand in the cookie jar is the property manager. It’s the only last bastion right, we’ve only got one hurdle to clear with our income properties. And if we self manage them, or do better yet the hybrid approach that I recommend where you self manage on the monthly basis, but you manage the tenant turn and hopefully you will minimize those with your prop without a property manager. you minimize the term With an agent or a property manager offering unbundled all a carte services, to handle the turn between the old tenant and the new tenant, and that is the best plan out there. That’s the best way to go. So we discussed that on many episodes, we’re going to do a little complaining today. So please don’t take this as too negative. I want you to ask yourself compared to what, throughout this interview, it’s a case study with one of our clients has been on the show before he’s a great client, he I think he’s up to like 21 properties now. That is Matthias. We’re going to play about half of his interview today. And then on the next episode, we’ll play part two, but remember something you know, I’ve been accused many times of being a complainer. And I want to just submit to you that I know you shouldn’t be negative, right? Yeah, ultimately, I’m, I think of myself as a rather positive person. But sometimes I get complaining complaining is that a word?

Jason Hartman 17:58
I had a girlfriend years ago and Laney Laney complaining Well, I never told her that but hey we still broke up anyway. She She was not a complainer, but I’m a complainer people say that sometimes. Right. You’re a complainer. I would submit to you that complainers are the people who change the world. Was Gandhi a complainer was Martin Luther King a complainer was George Washington and the other Founding Fathers of the country of the United States. Were they complainers? They were all definitely complainers. In fact, I remember a lot of these original complainers about England, they were complaining about England. They had a big Tea Party, didn’t they? Yes, they did in Boston Harbor. And those complainer’s Well, they changed the world didn’t they? for the better I would submit to you the thing that came out of that the Constitution and the papers, the founding documents of the United States of America, which make it such a special country. Hey, listen, folks, I know We got listeners from 165 countries around the world. I’m not some America freak, okay, I’m just lucky, okay to happen to have citizenship here. There’s certainly a lot of other great countries, but the US is pretty special experiment. Okay, at the time, the only experiment before the US that really kind of had it right was the Magna Carta, okay, where you actually gave people rights against the government. And that’s a very unique concept in human history. Okay. And, you know, at least up until recently, I don’t know, you know, I don’t have any specific date on this, but up until I’m gonna say 3040 years ago, the US was the only country on earth with the word happiness, the word happiness in its official chartering documents. Try that on for size. That’s pretty cool. So we’re going to give you the first half of this interview, just in the interest of time we’ll play the next half on the next episode, and remember compared to what they are can be difficult sellers, there can be difficult property managers, but we want to empower you against them. We want to empower you and make you the empowered investor. That’s what we’re here for. You know, we want you to have as much control as possible, with as little involvement and responsibility as possible. Now, listen, if you’re going to have control, you’re going to have some responsibilities. But again, what we do here is we make that easier. So hats off. We’ll see you on the 19th in Philadelphia, and maybe we’ll even see you the next weekend in New York. For the venture Alliance mastermind. Go to Jason Hartman calm for more info about these. Let’s welcome our wonderful client Matthias, who’s going to share some of his story with you today. In part one, here we go.

Jason Hartman 20:55
Welcome back, a returning guest that is our wonderful client and now friend of The show a few months ago, I recommended when Messiah was having some problems that he filed a complaint against the seller and property manager of his property. And he did and he got some justice he got some recourse out of that. So very exciting. This is something I want to recommend to everybody listening, be the empowered investor, be an empowered investor, be an empowered consumer, do not be a victim. So there are ways you can hold people accountable without without having to go out and hire a lawyer and taking them to court and dealing with that whole mess because that is just a mess. And it usually doesn’t work. And I’m telling you that from my own experience, but you know, there are some other things you can do. We’re here to talk about those today. And and remember something else before we dive into this. an ounce of prevention is worth a pound of keywords. An ounce of prevention is worth a pound of cure. Another old saying like that I used to hear from my aunt burness is a stitch in time, saves nine stitch in time saves nine. So, you know, that’s another thing we’re talking about today, right? And Matthias is going to share a couple of best practices, learned the hard way from mistakes, he made that now, you know, he will never make those mistakes. Again, the real world University of hard knocks, school of hard knocks, and then we’re going to talk about what you can do. Even if none of that works, the prevention doesn’t work. Okay, so so Matthias, welcome, and thank you for sharing your story with all our listeners. We really appreciate it. You’re welcome. So what happened,

Muthiah 22:40
I bought a couple of properties in Alabama. And one of those properties that I bought, turned out to be a big disaster. The property had a pool and never owned the property with a pool just one had a pool and that brought some problems along with it. One of the mistakes I made I hope others will learn from this is to make sure that you’ve conducts a home inspection when I’m when I say Home Inspection or Home Inspection the entire property I mean not just the home in my case, I did not inspect the pool, which turned out to be a problem later on, there was some problems with the liner of the pool and so on. So, it’s important to make sure that you get a complete inspection and after inspection is done and the seller has done the repairs, you need to send the inspector back to go back and re inspected to make sure that the

Jason Hartman 23:26
absolutely backed up. That is a good best practice. So two things there that were saying just make sure everybody caught those. Number one, generally speaking, try to avoid properties with pools. It’s not a hard and fast rule they certainly can be more desirable. So you know for the hassle and aggravation of this whole extra system and potential piece of liability of course, it could be worth it if it pays for itself and then some but most properties won’t have a pool. Okay, but you know here in there, you’ll see one with a pool that makes sense is a good rental property. Okay, so I’m not saying yes or no, I’m saying mostly No, but you know, not completely. So the first thing is if you have a pool remember, in addition to your normal home inspection, you must also have a pool inspection. And that is going to be almost for sure that it’s going to be a completely different inspector that specializes in pools and pool systems. So, have a pool inspection. The other thing is when you have because you must always have a home inspection. When you have that home inspection. There will almost always be punch list items, you know, and you can decide as the empowered investor in the buyer yourself. But if they’re, you know, just minor little items, you can just let them go and trust that the seller is going to take care of them. If not, though, you must have a re inspection you have to pay an extra fee to have the home inspector go back to re inspect the property and make sure that all of those repair items are done before you closed on the property, okay. And if they are not done, do not take a promissory note from the seller that says they will do them later. The only thing I would accept is money held in escrow. In other words, part of the sellers proceeds held in escrow, if they somehow for some reason, can’t get those repairs done before closing, then the closing attorney, the escrow the title company, they withhold part of the sellers proceeds that requires a mutual instruction or at least your signature before those funds can be released and make sure those funds are adequate. So for example, if they say well, you know, the property needs a new water heater, right? And you know, say you determine that a water heater is going to cause I don’t know 700 bucks, right? Then you know, you withhold 700 at least you know, maybe a little probably some extra, okay because you never know what else you might discover. So if they agree to withhold $1,000 After the closing of the deal, and you control that money that you know, can’t get released to them until it’s fixed, then you’re going to be okay. That’s your insurance. Okay? But don’t just accept a note, with no money behind it, you know, Show me the money is Jerry Maguire says, Okay, so, Messiah. Okay, go ahead.

Muthiah 26:20
That was the very first thing. You know, the next key point for me was this is something that’s always, you know, ever since I started buying property to the network, it’s been something that I’ve had success and problem was with the property management company, you know, I mean, all these property management companies have the shattered contract that they have you signed, you know, I think it’s important to read that properly. And so you know, what you’re getting into, I think it’s also important to have a good relationship with the property management company. And I know it’s a good idea to go with the company that the seller recommends, but I think that they have a beneficent interest. And so I would just shop around if you have time to look at other property manager, please what you need to work with somebody to come Would because they could make it very difficult for you going forward by not crediting your accountant, I’m not communicating with you properly. A lot of things and you know, and Jason flawlessly, or last two years, this is just my opinion, I could be wrong with this based on my experience. So the bigger the company is, the more layers that are in the company, it’s very hard to deal with them. And you can get lost in the shuffle. I mean, I’ve got properties with companies that manage thousands and thousands of properties, and they’re just too many layers. Okay.

Jason Hartman 27:30
Okay, so more bureaucracy, right. So there’s a trade off for that. And I’m not sure which is best. there’s sort of two kinds of companies in the world on each end of the spectrum. There’s the big company that supposedly supposedly has really good systems. You know, they’ve invested more money in technology and software and they’ve got protocols and got business processes, hopefully that are more established right? They’ve got more bureaucracy. Right. So that’s the big company concept. It’s good and bad. Okay. On the other side of the spectrum, there’s the small company that is, you know, kind of winging it. Okay. In some ways, but, but they’re hungry. I mean, in theory, they’re hungry. And they’re really going to just give you a great service, right to try and make a name for themselves and, and try and get bigger, right? You know, that’s what every entrepreneur wants is to be bigger, right? And so it’s kind of two ends of the spectrum. And, you know, the experiences mosiah they can go either way with either one, the small guy, it’s sort of not as efficient and a lot of ways Usually, the solopreneur or the small office with three people, you know, versus the big company with 30 people, you know, I don’t know, I don’t know what the right answer is. It just all depends,

Muthiah 28:48
you know, like, No, just No, well, I decided to say, look, I think it’s important to make your expectations very clear to the property management company from the very beginning, right, so they know you’re not just passively sitting back in And then accepting whatever it is they credit your account. If they do that $500 or $10. You don’t know why they deducting it, you need to question these things, you know, you need to question you look at your statement, you need to look at your own spiral. And what why did you do that? You know why? Why is this my response to the not the general response? You know, those are questions, I think it’s important for investors to ask the property management company so the next time they know that, hey, you know, maybe we should be more careful.

Jason Hartman 29:28
Let me mention a few things here. So first off, I don’t want any of you listening to be the easy customer. I don’t want you to be a pushover. Okay. You know who you are. On the other end of the spectrum. If you’re a pain in the ass, I don’t want you to be too much of a pain in the ass either. Okay? Because you’re, you know, it’s like neither of those people gets very far in life, right? The difficult person, nobody wants to work with them. And they will just put up their hands and say go somewhere else. Right. The pushover gets taken advantage of all the time. So I think the answer is somewhere in the middle. Right? You know, I would if there’s a continuum between the totally difficult impossible client and the pushover, everybody listening when it comes to dealing with property managers, I want you to be 6560 65% toward the more difficult person, I want you to be an aware empowered investor. But here’s the thing. You can have high expectations without being a jerk. Okay, being a jerk just won’t get you anywhere in life. Okay, you know that always backfires. You know, there’s it’s just doesn’t work, okay? But you can still have good expectations and high expectations. When you were talking about the contract Messiah and the importance of reading it. The importance is way more than reading it, reading it as the first step. The second part is negotiating it. So just because the hopefully you read it, so thank you for saying that. A lot of people don’t even read this. Okay, the thing I want you to negotiate folks, is I want you to negotiate the latitude. And this is not new information. I’ve said it on the last, you know, 900 and something episodes, okay? But negotiate the latitude, the property manager has to charge you for stuff. So again, they will have these standard clauses in those contracts, and they need them. Okay, but just how much to what degree do they need them as the question? So the clause will say, in case of an emergency, in other words, a pipe is break, you know, pipe broke and there’s water leaking everywhere. You know, the property manager has the right and you want them to have the right to go over and stop the leak to stop further damage. Right. Okay. But then the next thing will be those sort of optional repairs, the tenant calls and complains about something stupid, like I saw an ant on the kitchen counter, or the light bulb burned out, you know, no, you don’t enjoy This is ridiculous stuff, right? And I want you to look at that clause the way it’s written very carefully, okay? The discretionary spending plots, where it says the property manager has the right to determine at their discretion, up to $200 per incident of money that they can deduct from your your check. Okay? The funny thing is Messiah when it comes to like my mom has been on the show several times and you’ve heard her and commented about her. You know, she’s self managing. She’s like an extreme do it yourselfer, and I really am starting to be a real believer in self management, but she doesn’t spend hardly any money on her property. Some of these property managers, they’re just giving away your money. It’s ridiculous and you got to stop them from doing that. Do not be a pushover, okay? Just say this clause. I’m going to limit it to a per month amount, not a per incident amount. First off, there’s a difference between per incident per month, so the tenant could call twice in one month, and say, Hey, Well, today the garbage disposal is broken. And then, you know, next week, some other things broken, right. And suddenly, if the property manager conduct $200 per incident, you lost $400. You just gotta eliminate that discretion. It’s not necessary. The duty, though, on you, the investor, is that you have to be available and communicative and responsive. Okay, so if that tenant calls about something, and says this or that is broken and needs to be fixed, first of all, know what you’re actually obligated to do. Okay, you’re not obligated to do everything. You know, the tenant has some responsibilities, too. Okay. So that’s the number one thing and then the number two thing is you must communicate and approve or deny requests quickly. Otherwise the managers goes, Hey, hey, we need discretion because I couldn’t reach you for two weeks. And by then the tenants really unhappy Right. But the bottom line is, I’d really recommend people consider self managing, it’s much easier than you think. And we’ve done a lot of shows on that over the years. Anyway, so per incident, and per month, I want you to make it a per month limit of no more than $200, ideally less. So don’t just read your contract, negotiate your contract with your property manager, or just self manage, and you can take them out of the equation completely. Sorry. Go ahead,

Muthiah 34:28
right. Yep. Just let me play the devil’s advocate for just a second. Well, you know, property managers that manage hundreds of properties, they have this shattered contract and in spite of what they said, I’ve gone back and renegotiate, but they also will look we can make the change for you. We’ve got hundreds of contracts, we can just change it for you that would screw up our whole system. You know, we don’t have the resources to track your particular property and say, if your property comes up, and you know for some reasons, that is

Jason Hartman 34:56
$200 and you can take your business elsewhere. The place I’d really like you to take your business is to self management without a manager at all. See, there is a an inherent conflict of interest with property managers, you’ve heard me say this before, the conflict is that they’re trying to serve two masters. And you know, the rule in life is you can’t serve two masters. You can either serve the investor, which is technically the obligation is to the investor, or you can serve the tenant you can’t serve both. So the property managers will be liberal in spending the investors money as much as they can usually get away with it in order to make the tenant happy. Because you know, what the tenants do, when they’re unhappy, they go to Yelp and they start writing bad things about the property management company. And you know, it’s interesting whenever you hire a property manager, I want you to go to Yelp and read the reviews now. Look at we all know reviews are a lot of them are faults, okay? You know, their faults good and bad because their competitors you know, We’ll write bad reviews about them that are fake. And their employees will write good reviews that are fake to it. So where’s the truth? Nobody knows. Okay, but it’s probably somewhere in the middle. That’s why you just have to not look at the star rating necessarily. But you have to actually read the things and see if they sound legit and just evaluate them with your brilliant human brain. You know, that’s why we got these great brains. They work pretty well, most the time. And so that’s one thing to do. But if the property manager has a bunch of bad reviews, and they’re from tenants, I don’t know that that’s necessarily the worst thing ever. Right? If they’re from investors, that is really bad. There’s a bunch of investors saying, Oh, this property managers terrible, you know, they they ripped me off or this or that or the other thing that I really get concerned about, if they got a bunch of bad reviews from tenants, because they’re a little more strict with the tenants. That doesn’t necessarily bother me as much. We’re complaining right now, but compared to what is the question Compared to a wall street investment, or some investment in some fund, this is way better. It least here, you know what’s going on and you have some control. Yes, when you’re a direct investor with plan that we outline, you’re going to feel the bumps in the road. But you know what, at the end of the day, you’re going to have a lot more money, okay? Because when you buy the mutual fund or the stock or invest in some fund that’s buying apartment buildings or something, you don’t feel the bumps. But guess what? Someone has taken all your money, and you just don’t even know about it. Okay, here, at least you can see it right, and you can control it. So that’s what we want you to do is become an empowered direct investor. You know, that’s commandment number three, thou shalt maintain control. This is about being a direct investor and getting those higher yields because you’re in control. This will be continued on the next episode. Thank you for listening and happy investing. 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 heart and 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.

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Jason Hartman starts the show with his mom as they discuss property management strategies. They bring on Drew as well to give us another side of property management, self-management. Jason talks about a hybrid model that uses both a property manager and some self-managing. They talk about concerns, strategies, and general tips for management.

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. And 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 Episode Number 951 951. Thank you so much for joining me today. This is your host, Jason Hartman. And we are going to do a show with three people today. We’ve got our client drew Baker on the line, and our other client, my own mother on the line. We are going to talk about self management. There are a lot of misconceptions in this area. And I want to clear some of those up today. Drew has several properties. He has property managers for all of them. My mom has several properties, and she self manages all of them. So we’re going to go into this great, maybe great debate today about these different concepts and different ways to deal with self management and how that opportunity is available to you. But first a couple quick reminders and announcements if you were at meet the masters of income property Thank you so much for joining us for that. Go to Jason Hartman comm slash photos, Jason hartman.com slash photos and get your photos. And if you are into voyeurism. You can go there too. And check out the photos of everybody else. How do you like that? Check that out. And for the Ice Hotel, we’ve got another registration. Congratulations to Jeff and Shannon who are joining us for the bucket list Ice Hotel adventure in Sweden. We need a few more people to greenlight this trip. Check out the details at Jason Hartman Ice Hotel calm Jason Hartman Ice Hotel calm. Also we’ve got another event coming up a j h you Jason Hartman University in San Jose, California Silicon Valley, and that is coming up on March 3 very exciting event. We haven’t done this one in quite a while. We only do these about once a year. Let me just explain kind of the overview of some of our events. Just real quickly before we get our two guests going here, basically we do a couple different kinds of events. We do our annual conference meet the masters of income property. And at that conference, I don’t talk very much. That’s basically a conference where we have a bunch of different guest speakers. And you kind of know what that’s about, probably because I’ve been talking about it lately. Then we have our creating wealth, one day seminar, okay, creating wealth. And that’s my core content that I’ve been teaching for 14 years. And we’ve had thousands and thousands of people come through that it’s sort of philosophical in nature, philosophies, megatrends on investing things like that. And then we have Jay Chou. And we added Jay Chou, Jason Hartman University a few years ago because people were requesting some real interactive content. They wanted to know how do i do the math of investing? How do I keep score? How do I decide which property is to buy in which properties not to buy? How do I figure out the calculations. And so this is a very hands on event where you will need a pen and paper or maybe a pencil, and you will be writing and you will be doing the equations and analyzing investments. It’s a very interactive event. So that’s what Jay Chou is. This is on March 3, early bird pricing at Jason Hartman calm in the events section. So grab your tickets today, we’ve only got 15 tickets available at that early bird price. So we do have a partner on this event selling tickets for us as well. A local Ria Real Estate Investment Group up in San Jose, and so they will be selling tickets as well. These will sell very, very quickly. So Jason Hartman, calm in the events section for your tickets for that. So first of all, Mom,

Jason’s Mom 4:53
welcome. How are you? I’m fine, Jason,

Jason Hartman 4:56
it’s good to have you back on the show. You’ve been on several times, and people always love it when you’re on the show and of course you spoke it meet the Masters as well with my hand Joan, your sister talked about the way you guys built and manage your your real estate portfolios. And then we’ve got drew beggar Drew, welcome. How are you? Hey, thanks for having me back. It’s good to have you. Good to have you Andrew. Thanks for setting up the three way call. You know, folks, a lot of things bug me in life, I complain a fair amount. I know that horse leaf blowers are one of the biggest evils and scourges in modern history, modern life. The other one that just amazes me and shocks me on a daily basis is What a pathetic piece of junk Skype is. We’re talking on Skype now. And it has the world’s worst user interface. And every time they update the program, it gets worse, but it does have a benefit. It has very good sound quality when it works. So I drew had to set up this three way call because for Whatever reason Skype cited, it didn’t want to do a three way call today. It’s mind boggling. Anyway, enough of my pet peeves, but you know what else really annoys me? Maybe you guys will have a comment on this. People that drive really loud cars and motorcycles. I mean, how is that legal? to have these incredibly loud vehicles that I can hear in my high rise when I’m trying to sleep? They make noise, they echo for blocks and blocks around. It’s crazy.

Jason’s Mom 6:30
Do you guys agree with this? I’ve heard that there’s a strategy behind

Jason Hartman 6:35
gonna say that they don’t want to get it. That’s for the motorcycles. But how do you explain the obnoxious cars that are modified? And you know, and they modify them so their exhaust is really loud? It’s just obnoxious, frankly. But yeah, I know the safety

Jason’s Mom 6:48
every time somebody drives by like that. I just look at them and say out loud Wow, you’re so cool. In irony because it’s such a joke. It is really a joke

Jason Hartman 6:57
mom. Now you have allowed Car only because it’s an old car. My mom and drew have the same philosophy on automobiles. They drive them forever and get a lot of value out of them.

Jason’s Mom 7:09
Why should I throw away something that works perfectly?

Drew 7:15
I’m just the steady mark, I want to just stick with something and drive it till it dies. And it’s our creature habits. So why change it? If it ain’t broke?

Jason Hartman 7:23
There you go. There you go. Well, there is something to be said for a rational amount of frugality in life. I agree. But hey, both of you are pretty darn wealthy. I gotta say that much. You both have, you know, have different issues and frustrations with your property portfolio. And that’s what I want to talk about today. Because drew every time you come to me and talk about a property manager problem. I talked to you about how the hardest part of our business is property management. It’s where the rubber meets the road. It’s challenging, and I have recommended to you cell phone Management. And I would recommend it for a lot of people. Now look, folks, this is not for the newbies. If you don’t know anything, don’t self manage, right away, learn some stuff from your manager, learn about management. But my mother has been self managing her real estate forever. And I always self managed my local properties when I was strictly investing locally. But now that I invest across the country about 10 years ago, and I’ve told the story many times, I became an accidental self manager of a property I had never seen, and with tenants I had never met. And I still haven’t seen that property. And you know, I have self managed very successfully, actually, several of my properties for years at a time. And the self management thing I think, is really something to consider. You know, in every area of life. Sometimes, it’s actually easier to just go direct cut out the middleman. Sometimes it’s better to delegate things, I admit. But sometimes it’s better to just do things yourself. Right. And with management. Oddly, it might be counterintuitive to some extent. My mother, my mother is an extreme do it yourselfer. That’s what I call you in extreme di wire. Okay. She self manages everything. And she’s got properties in several parts of the country. So I just wanted to compare and contrast these two approaches for a bit. So Drew, you’ve always had managers you started buying in Indianapolis, how many years ago did you start and how many properties do you have now?

Drew 9:39
I started in 2010. And it was sort of a funny thing because I’d saved up a bunch of money to put a down payment on a house in California. And when the prices went in half, I had enough to put about half down for a house. And since I was self employed, everybody just looked at you and laughed. If you were thinking you were going to get a loan So I took the money and bought some investment property that estate that required cash only deals because they were all bank foreclosures through your network and I’m up to 10. Now, so congratulations. I picked in Indianapolis and I have four in Memphis. Okay, so six

Jason Hartman 10:16
in Indianapolis four in Memphis. And I remember you were buying stuff. I mean, you got some good buys on stuff back in 2010. So did everybody else, you know, of course, and I think the first property you bought I remember that property in Indianapolis. It was about what 55 $60,000 something like that.

Jason’s Mom 10:34
Oh, Jason, how dare you know, I got some I got some amazing deals. all the places I bought in Indianapolis were between 40 and 50,000. Wow. Wow. All fairly new construction. You know, I think my prep my crown jewel was I got a four bedroom, two bath 1400 square foot house, you know, built in 2003 And I got it for 40 grand.

Jason Hartman 11:02
Oh my god and that so that was that was that was really a class a property, wasn’t it? I mean, it’s adult in 2003 Oh, no high speed. Yeah, I would say the problem is that with these areas that everything was built at the height, the market sort of evolved where everyone that came in got foreclosed on. So the neighborhood is sort of a little bit destabilized. But you know, build isn’t a build. So you got an A house, but you know that the neighborhood is probably more of a C plus neighborhood. Right. Right house because because ever because they were giving loans to everybody who could fog a mirror. Yeah, absolutely. So thanks for sharing that. And Mom, tell us about your situation. I mean, you were investing all around Southern California. And then you move. And I finally even though you never listened to me, I finally got you interested a little bit and investing in some of these lower price markets and you’ve got a couple of properties in those market. Right, Alabama, Mississippi.

Jason’s Mom 12:02
Yes, I do. And I had property managers for both of them. And the happiest day was when I got rid of those property managers.

Jason Hartman 12:12
I love it. And folks, I want to tell you, you can be free of property managers too, if you want. But there’s an interesting thing. And I think I want to, I’m going to take the middle ground in this discussion between the two of you on one corner, you know, so if it’s a boxing match, we’ve got my mother who’s the extreme, do it yourselfer. And in the other corner, we’ve got Drew, who has property managers for all of his properties. But Drew, since I know you and you’ve been a client for many years and a friend before that. You are a do it yourself or in many other areas of your life. So I don’t think you’re like afraid of doing this, but you do have questions about it. And so I’m in the middle, I’ll kind of referee this discussion. And here’s what I want to just start with to make the conversation faster. I Do a hybrid self management approach, that’s what I recommend. So the hybrid part comes when you need to get a new tenant, when you’ve got a tenant that is moving out, and you’re between tenants. That is the part where I believe you should always hire a real estate agent, or better yet a property manager just to simply do the lease up between tenants. Now really, you give them a little more responsibility than the lease up itself, okay? Because of course, in order to do the lease up, they need to meet with the tenant who is leaving, they need to get the keys from them. They need to go and say hi to them. They need to do a walkthrough of the house and take pictures and send them to you so that you see what condition the house is in when that tenant was leaving. And you know, they can help you determine how much of the security deposit you want to give back and so forth. And you need to send the tenant a letter saying, Hey, you know, your security deposit was 1500 dollars, but I kept $300 for this, that and the other thing, and you need to itemize that. And there’s, by the way, a time limit on that security deposit letter, I think in California, it’s like three weeks around the country, it’ll vary. So just know that and then you get the real estate agent or the property manager, doing all a CART services, all a CART services, if they’re a manager, okay, where they will screen that tenant, they will take applications they will advertise the property, etc, etc, and you will pay them strictly to do the lease up. Now, if you had a full property management contract, what that would include is them receiving the rent every month in handling everything, okay? So this is understand my opinion of this is it should be a hybrid approach. Now, Mom, the funny thing about you and I love that I loved it. I thought that was hilarious when you said it. You said from the stage it meet the masters. I think I was bugging you or someone had asked a question about why do you do all this yourself? You do it 100% yourself you don’t get the help of anybody except maybe some free help from a local realtor occasionally and, and you can comment on that. And you said, Well, I’m retired. I don’t have anything else to do. I thought that was so funny. You carry comment on that?

Jason’s Mom 15:27
Well, yes. Because you know, it just keeps you kind of active in in the game. When you’re retired, you have to go to all these multiplying women’s luncheons and raise money for charity and that is the most boring thing in the world. I like I like to be in business

Jason Hartman 15:46
through does that just make you laugh with my mom.

Drew 15:51
I

Jason Hartman 15:52
love it. You’ve got to go to all these stultifying women’s lunches.

Jason’s Mom 15:59
You have to do so thing with your life.

Jason Hartman 16:01
Yeah, of course.

Jason’s Mom 16:03
Because think that’s a little bit boring to me.

Drew 16:05
Yeah, yeah. Good.

Jason Hartman 16:06
Well, I I agree, you know, I have zero interest in ever retiring. You know, I think he’ll the people that live the longest are the ones that keep themselves busy and occupied and stimulated So I love that you do that mom, I think it’s great, but it doesn’t mean that you need to deal with every little thing on all your properties. But drew What were you gonna say? Oh, I just was gonna say I remember one time that’s an April Fool’s You said you were gonna retire? Yes, I did. I did write that on Facebook once. Yeah. Anybody who knows me knows that. That ain’t never gonna happen because I have you know, I don’t care how rich I get. I like working I you know, you got to do something. You got to stay engaged with life very important thing in my opinion. But mom, tell us about some of the issues and things that you deal with self managing your I mean, you’re self managing long distance. And you are the extreme do it yourselfer

Drew 17:00
Tell us a little bit about it. Well, let me make a suggestion. First off to drew crew, there is a wonderful organization called the apartment Owners Association in California,

Jason Hartman 17:12
and all over the country, by the way, just go ahead.

Drew 17:16
Okay. Well, the one that I particularly belongs to someone in California, it’s $79 a year. And with it, you can run your credit reports, and every form that you ever need in the world to do everything legal is a part of that association. Plus, they send you a monthly magazine with all sorts of interesting articles. One of them is cases by you know, a landlord eviction attorney, and it’s just fabulous advice. Okay. So that would be the if you’re going to self manage, that would be the first thing I would suggest that you do.

Jason’s Mom 17:53
Okay. Great.

Jason Hartman 17:55
Apartment owners associations are not just for urban governance. line. It’s a Oh a do s a.com. Okay, so apartment owners associations aren’t just what they sound, the name is a little deceiving. I just want everybody know that they have these all over the country. My mom happens to be a member of that one just because that’s where she used to live in Southern California where I used to live and spent most of my adult life. Let me just give you a little context here to for the conversation. We of course have sell properties nationwide through our referral network. Drew lives in orange, California and Southern California. Mom and I grew up in Southern California in Los Angeles and Orange County. That’s where both of us started investing. You know, she was investing when I was a kid. And then when I grew up, I started investing there too. And I found it to be very speculative. And I wanted to invest in better sort of cash flow oriented properties. So you’ve heard me talk about that before, but just a little context there. The apartment Owners Association, the association stations all around the country that they have are for any type of properties. So the names a little deceiving. If you own single family homes, you know, you can still join an apartment Owners Association. And my mom does everything herself. So she runs the credit for the prospective tenants herself, does the background checks, and you can get that service yourself. I am not suggesting you do this. I think for our investors, the hybrid approach is the right approach to have. So let’s talk about that a little bit. Drew, you have questions and concerns about this. And I’ve said a lot about it. Talk to us about some of your questions and concerns and let’s just answer them for you.

Drew 19:41
The first thing is I think it’s important to just basically started off with some assumption that you know that you’re not going to live near the property. I know you guys have some property in Orange County, or at least did or LA County and you

Jason Hartman 19:54
know, it was I wanted to say By the way, my mom now lives in Gulf Shores, Alabama. So she doesn’t live in Southern California anymore. Of course, neither do I. Okay, so she’s she’s across the country, just so you know. Yeah. But she also owns property in Alabama and Mississippi, and even the Alabama properties not near her home, but go ahead.

Jason’s Mom 20:13
Yeah. Okay. So yeah, so you’re not you don’t live near the property, you’re not particularly handy. So well, like you can go over there and change a light bulb or whatever. She’s like,

Jason Hartman 20:21
more hands. And you might think, but go ahead.

Drew 20:24
Okay. All right. Okay. All right. Well, okay, maybe we’ll change it a light bulb, we can handle, you know, doing something more complicated, maybe. And you’re not afraid to make mistakes, you know, so make small mistakes, but you’re very afraid of making a big mistake. And then obviously, there’s exceptions to every rule. So, you know, you have to be flexible, because you’re basically a small business owner when you’re having to deal with a tenant and the tenant as almost like your employees. So you have to have some sort of business II feel to approach this and be successful. I hope. So. That’s kind of the assumptions I think are very To make starting off, yeah.

Jason Hartman 21:02
And Mom, you know, if you didn’t do the lease ups on your properties each time, really, I think the rest of the stuff you do is really quite easy. So I’d like to talk about that. I see, I think the area that, like I said, the hybrid approach, hire a property manager to do the lease up, they will probably will you and court you to try and get the ongoing account because that’s the part that’s easiest and most profitable for them, I believe. Okay. But you don’t want to do that. You want to have the tenants and you the rent every month. So mom, talk to us about how you do that. I love the way you do it. It’s super simple. You make the tenant responsible for just putting the money in your bank account. And you look online, and you’re really on top of it, you know, every month on the first you look and see if those deposits were made. Talk to us about that.

Jason’s Mom 21:58
Well, the first thing before that happens, you have to let that tenant know that you are an absolute stickler for getting your rent or before the first day of the month. And that’s what makes it easy. What I do that when I meet with a camera, of course, you want to let the real estate agent handle that. Well, the first mistake they’re going to make is that they’re going to give the tenant that grace period in the reef. And so when it says you know, when the rent is due, you cross out that grace period thing and you say zero days, and then we inform the tenant that the late fee will be $70 if the rent is not there in your bank account rather on the first day of the month, and it is $5 each day until the rent is paid in full.

Jason Hartman 22:54
Okay. Let me say something on this. Let me say something on this. The laws regarding late fees do Very, but yours is actually not that bad mom, you’re actually kind of easy about it, remember it meet the Masters, when one of our property manager said it’s $25 per day. And I asked them, and that was in Memphis, by the way. And I asked him, I said, Is that legal? And he goes, Yeah, it’s legal. So, you know, you’re going to have a tenant pay out pretty darn quick. If it’s 25 bucks per day. That’s expensive. So what you’re saying is that a lot of the leases have a boilerplate in them that say, you know, rent is due on the first and on the fourth, you’ll be poor. Yeah. Which is kind of silly when you gotta stop doing that. Yeah,

Jason’s Mom 23:37
right. That’s just ridiculous because that means you’re always going to be chasing your rent, right? My rent are typically in my bank accounts the first day of the month. For

Jason Hartman 23:49
right, okay, what else do you deal with on a monthly basis? Because, again, my recommendation in this whole discussion, just make sure you hear me is that the owner, the investor There’s a landlord deal with the tenant on the ongoing monthly basis but not on the lease up and the screening. I think that’s the hard part. So you delegate the hard part and do the easy part yourself. Your tenants, you know, Mom, everybody talks about how, oh, you’re gonna get a call at three o’clock in the morning that the garbage disposal doesn’t work. I mean, I never get those calls. That’s just complete like

Jason’s Mom 24:24
football. That’s freaking killer. First of all, before we get to it,

Jason Hartman 24:27
tell us about that. bug you all the time. This is what people envision. No.

Jason’s Mom 24:32
Yeah. Okay. No, the longer you have the tenant, the last half so you have with that tenant because they start regarding it as their house and they start fixing things. So you never get those. The garbage disposal is clogged, the toilet is blood. And besides your leaf states very clearly, that any garbage disposal that is plugged up because the garbage disposal works perfectly when they take over the House, that is their responsibility to call the plumber. Because they’re the ones that put the bad stuff down at the same thing with a toilet. The same thing with changing light bulbs. The same thing with the yard. They’re responsible for watering for mowing, edging, trimming, all of those things are clearly spelled out in the lead. And you do not get those kind of calls. That’s ridiculous.

Jason Hartman 25:23
I know. It’s kind of like all the lawyers that talk all about this asset protection, you know, this huge need for more asset protection. You know, oh, what if the tenant does a slip and fall? I have never heard of that lawsuit ever. I mean, I hear people talk about how it could happen. And it could I admit that, but I’ve never heard of it actually happening. Mom, have you ever had a slip and fall lawsuit or has a tenant ever actually sued you for anything other than you know, like dead dispute in the rant or an eviction when you’re trying to victim? No, they never. And how long have you owned a rental property for 40 years now, I heard something. You know if this stuff is just folklore, a lot of times this is just mythology folks

Jason’s Mom 26:07
about 1980 I would say,

Drew 26:10
okay, since 1980, you’ve owned rental properties and a tenant has never sued you drew questions. Oh, I was gonna add a point of humor. So my wife growing up the bottom unit, the kind of bottom two bedroom apartment that she she lived in a house where the top unit was the main house and the bottom unit was the granny flat and her grandma slipped on the front porch and had fractured her hip. And her parents said will sue us because that way you can take advantage of the homeowners association. Slip and Fall. That’s the one that I’ve only heard of. So grandma was in on the tape.

Jason Hartman 26:49
Okay. So mom with this ongoing monthly, you know, rent collection, repair issues, do people call You and say there’s some ants or cockroaches in my house, you know, send over a pest control company. Do they do that kind of stuff? It’s not my responsibility

Jason’s Mom 27:10
to do pest control, putting and you know, you’ve had the company come in, you know fumigate it okay type of thing. That is a responsibility. That’s my judgment. Okay. And I will not I had a tenant in Canoga Park, who, after three months, she said, the dog got fleas in the backyard. And I said, Well, most people have their backyard sprayed when they have you know, it’s just not your responsibility.

Jason Hartman 27:40
Yep. So here’s the other thing, Andrew, you know, and all the listeners I’ve talked about this many times when it comes to the self management discussion. The property manager has an inherent conflict of interest. A lot of good property managers will get complaints on Yelp on you know, online Right, because they’re tough with the tenants, you got to notice whenever you’re looking at a property managers reviews online, who are they coming from? Are they coming from owners or tenants? The property manager is inherently and I feel a little bit bad for them. They’re caught in the middle. So they’re trying to serve two masters and you can’t serve two masters. That’s the rule of life, right? It’s an inherent conflict of interest. So they will tend to maybe be soft on the tenant, costing the investor or the landlord or the owner more money, because they don’t want the tenant to go write bad things about them online. You know, they don’t want to argue with a tenant about stuff so they’ll give your money away. It’s kind of like these liberal politicians, you know, they give other people’s money away so that they can be seen as the nice guy like their frickin Robin Hood or something. You know, it’s it’s ridiculous. Talk about like, the late Ted Kennedy. Oh, he was such a nice man. No, he was a person who stole money from some people and gave it to other people to buy their vote. He’s a you know? I mean, how is that generosity? Yeah, everybody’s generous with someone else’s money aren’t they? Crazy? Less we digress.

Drew 29:13
Don’t let him drag it Don’t let him drive you to a party. Yeah,

Jason Hartman 29:16
exactly. So, Haha, yeah Chappaquiddick Chappaquiddick.

Jason’s Mom 29:21
Why don’t we talk about if a toilet needs to be changed or some particulars. Again, you might have in mind drew

Jason Hartman 29:32
drew ask ask the extreme do it yourself.

Drew 29:36
What what I think the important thing is to say I think we’ve already touched on it a little bit. But Joyce, I’m curious, Jeff line, you have a vacant property. What are you doing? are you flying and putting getting posters and putting them up in the neighborhood? Yes, you know, how are you executing that to get the tenant if you’re not using a management company, I want to start there and then we’ll get into now you have a tenant, but first How do you have a vacant property? How are you turning the unit and how are you getting the tenant?

Jason’s Mom 30:05
Okay, well, this is because I’m doing this all of my all myself and I come to Los Angeles or I go to Gulfport, Mississippi or I go to North port, you know, Alabama, and before I go there, I line up painters and gardening people because I don’t expect the property is probably going to look kanak ready. And so instead of wasting time, I will call 10 different papers, and I will make appointments with him every half hour or so now you can’t control when they show up, but they will all give you estimates on painting that property and at the end of the day, you will know what the good price for painting that house and bloody and I’ll also have gardening people show up and tell me getting the place You know, shaped up, what that’s going to cost. If you think you’ve got plumbing problems, call and have five different plumber show up. You handle all of that stuff the first day. And in your phone call prior to ever arriving at the property. You say I will be in Los Angeles on January 10. And I would like to meet with you at such and such time. And if we can agree upon a price, you need to be able to go to work immediately or the very next day because you don’t want to spend a lot of money on motel bills. So within three days, I have no stream

Drew 31:47
because those people want to go to work immediately.

Jason Hartman 31:49
Right. And this is the part everybody that I am saying you delegate, this is what the real estate agent or that property manager will do for you. The tenant turn. But there’s two magic things about what my mom does I disagree with her doing all this herself. But you know, it’s like her retirement fun, I guess. So, whatever, you know, to each their own. But you know, one of the things I will say is, my mom gets great deals on stuff and drew you get great deals on stuff too. And I’ll just share a personal example. I didn’t even know this. I didn’t realize that I have a very good property manager for some of my Florida properties. Okay. You know, I’ve been with his property manager for years. She’s great, okay. And this is how I decide whether I’m going to have a manager or not, if they’re good, I keep them. If they’re marginal, or they’re terrible. I get rid of them and self managed. That’s sort of how I make my decision. Kind of by default, whether I’m going to do it right. And so the other day she reaches out to me I’ve got her trained now to use voxer. That’s another thing that makes things very convenient. She reaches out to me unboxer says, Jason, your property on I can’t remember the address, but your property It needs a new refrigerator. And I box her back right away. And I say, I didn’t know I owned a refrigerator there. And she says, Yeah, you know, all our properties. They have refrigerators. Okay, well, fine. She says, and it’ll be $870 or something. And I said, That’s ridiculous. I’m not paying $870 for a new refrigerator. I said, you know, maybe we should just go to the tenant and say, we’ll reduce the rent by 10 bucks a month, and they buy their own refridge and she was like, Oh, no, we can do that. Blah, blah, blah. You know, it’s ridiculous, right? And I said, Well, that’s just too much money. So somehow magically, she finds a better deal for me. And the next deal is, well, I’ve got this one. It was returned this refridge there’s a mom and pop up playing shop here. nearby. And this refriger was returned. She sends me pictures of it looks beautiful, looks perfect. Right? And you can get it for $350. It’s basically new under full warranty. It was just for turned in my guy Oh, pick it up and install it and get rid of the old one for 160 bucks. I said, that’s fine. I’ll do that. But the hundred and $60 is too much. I’m happy to pay 350 for the refridge then somehow that refridge sells out from under me and I’m a little bummed out. Then she finds a new one. Brand new one on sale with delivery included. And disposal. The old refridge included, okay, from I don’t know, maybe it was Lowe’s or something I can’t remember. She sends me the link and the whole price all in for everything brand new, beautiful. refridge was like $460 Isn’t that amazing? Just because I resisted and didn’t accept what she told me. This is one of the things I’m saying, look, folks, I’m a wealthy guy. Okay, I got more than enough money, okay. But why waste it number one and number two, it makes you better to go through the exercise sometimes, and push back a little bit and you’ll be amazed. Just Asking a couple questions. Suddenly you save $400. It’s amazing.

Jason’s Mom 35:06
Yeah, at one time, I had a tenant who wanted a security door, you know, one of those have wire mesh doors on top of their door because they felt like they heard that there been a local break in or something. And so the property management came to me and said, it’s going to be $300 to do this. And I said, Well, if they want to add some security door to the front door, that’s their prerogative. I mean, that they rented it as is. And I said, Well, you know what, okay, I’ll do it. We can add $10 to their monthly rent, or I’ll split it with them. Yeah. And so they ended up going with the split and then I thought that was fine, because it’s, they’re adding it to my property, so I shouldn’t have to pay for some

Jason Hartman 35:44
of it. In theory, it’ll improve the value of your property. Right. And so that’s the other principle I want to say in Mom, I I kind of doubt you do this, but I’m willing to do it like Drew. I did that deal on that first self managed property in San Antonio, Texas. Where I didn’t know the property didn’t have a garage door opener. And you know, the tenant sends me a note with the rent when my property manager gets out of the business, suddenly I’m self managing by default. That’s how it happened property I’ve never seen tenant I’ve never met. And he says, you know, I’d really like to get a garage door opener. So what I did is I basically said, Look, if you will pay, I think I can’t remember the amount. So forgive me the exact numbers here, but I think I made a deal with him. If he would pay like $15 a month more in rent, I would buy the garage door opener, and he actually installed it. He was a super handy guy, and he installed it Now I know what some of you were thinking. You’re thinking, Oh my God, that’s gonna create liability. You know what if he gets hurt installing it, you’re gonna get sued? Yeah, I guess so. That’s possible, but it didn’t happen. And so here I am basically financing his garage door opener. And in about 14 months, he paid me back for it and I improve the comp the value of the world. Overall. So, you know, there are lots of options here. Yeah, make deals. Don’t be afraid to make deals with your tenants. A lot of times they want to improve the property. And you know, improving your property is okay. They will help you finance the improvement many times. This will be continued on the next episode. Thank you for listening and happy investing. 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

Jason Hartman 37:36
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.

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On this show, Jason Hartman brings on two clients to discuss properties they’ve bought through the network during the Memphis Property Tour. They discuss why they do business with Jason and their experience so far. Later on the show, Jason plays a clip from the Venture Alliance Mastermind with Jeff where he talks about a work-life balance.

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 has 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 1:05
Welcome to the creating wealth show. This is your host Jason Hartman episode number 812. I apologize in advance about the sound quality. We are here live at our Memphis creating wealth seminar and property tour. Two of our attendees just walked up and I said, Hey, do you want to be on the podcast tomorrow? So they agreed to do it reluctantly, maybe I don’t know. Is it reluctant?

Adam Jackson 1:27
No, this is this is great. Okay, good.

Jason Hartman 1:29
So we got Adam Jackson here. And Adam, where are you from? From Shelton, Connecticut. Okay, fantastic. And yesterday on the property tour, you bought a house. I remember we got out and we looked at that property and you said, Hey, I

Adam Jackson 1:41
just bought this one. Yeah,

Adam Jackson 1:42
actually, I had. I wasn’t really intending on buying it. But after going through it and looking at it, it looked like a great asset. And as soon as I found out that nobody else had picked it up at that point, I decided to go ahead and take it.

Jason Hartman 1:54
Yeah. Good for you. Congratulations. Now, when did you start listening to the podcast.

Adam Jackson 1:58
I started listening now about a year and a half. ago.

Jason Hartman 2:01
Oh, fantastic. And Was that your first property that you bought yesterday? Or have you been buying other investment properties? Or, you know, give us a little bit of background? Sure. Actually, I started investing back in September 2016. And since then, actually, this this was my 10th income property that I picked up

Adam Jackson 2:17
yesterday. Fantastic. So you got your 10 Fannie Mae, Freddie Mac loans right already maxed out. So this is technically this is the 11th because my primary residence takes up one. So yeah, the the 10 loan limit has been maxed.

Jason Hartman 2:29
So Adam, you had come up to me just a moment ago, and you were talking a little bit about your experience with investing in the creating wealth show and so forth. And Was this your first event that you’ve attended a verse?

Adam Jackson 2:40
Yes. This is the first event with the Jason Hartman network.

Jason Hartman 2:43
Good stuff. What have you learned on the podcast? or what have you thought about it? I mean, has it helped you in your investing? Is it the Is it the first investment education you’ve had? Or have you been working on this stuff for longer?

Adam Jackson 2:54
Actually, I’ve been studying it for probably about two years now. And I mean, But my learning curve went up tremendously as soon as I discovered the podcast, and since then, I mean, I study on my own. But of course, I listened to the podcast religiously. So this is something that I’ve probably been studying it now for two years, and decided to start investing. Because about six months ago now, eight months ago,

Jason Hartman 3:18
fantastic, fantastic. And you’ve already got your 10 it’s in which which markets are you in? Okay, all right now, five and Mississippi, and five in Memphis. Okay, so you did five and five, and your next five should be in another market. Okay. Because I want you to be in three markets.

Adam Jackson 3:34
Okay. Yeah. Now that sounds good. I mean, not now. This gives me time to sit back, do some research figure out what’s going to be most fitting for the portfolio. And and then we’ll just pull the trigger on the third market. Good stuff. Fantastic. How’s it all been going with you? Have you had some bumps in the road? Some problems? Has it been pretty smooth, or how’s it been going? I’ve got to say it’s been it’s been really smooth. And most of the properties that I’ve that I’ve acquired, have been rehabbed. So the maintenance costs have been fairly low. But you know, as far as all that goes the the rent has been collected each and every time. And then there’s just minor and really just minor maintenance costs. But other than that, I mean, it’s been a really good experience so far.

Jason Hartman 4:13
Hey, that’s fantastic. Good to hear. Good to hear. You won’t always be that way. I’m just gonna warn you there will be bumps in the road, there will be problems I figured I’m mentally prepared for for any kind of, you know, small issues to arise, but I’m ready to deal with them. Good. Good stuff. That’s a good attitude. Definitely. Okay, Stefan, are you gonna be on the podcast? Do you? Come on Get over here. So Stefan is from Northern California from Fremont, California. And he was super kind drove all over and Coco and I up to Jonesboro, Arkansas on Friday, yeah, the day before our event here. And so thank you for driving us. That was great. And it was really great to get to know you and talk to you and learn about your career and your investments and so forth. So again, thank you for doing that. Now.

Stefan 4:59
Is this Your first event of ours actually just be my second event came to the meet the Masters event in January. And that was a really big blast being able to see a whole variety of different markets specialists. Since then, I went under contract with two properties. And I wasn’t expecting to get something here this time, but just went in there. everything made sense, you know, all the parts came together really well, you know, you got to really a really good local market specialist. And the lender is really convenient to have all these presence of these members present here like the air in here for the lending and just went ahead and got one pull the trigger one this time,

Jason Hartman 5:40
good for you Good for you excited about that. That’s good to hear. So it’s like that one stop shop kind of thing. It makes it really easy, huh?

Stefan 5:48
I think that’s what makes it really unique with your you and your group is that you have the whole machineries already. You know, over the years, I’ve always considered and thought about possibilities in real estate even from 20 years back and Carlton sheets are, you know,

Jason Hartman 6:01
and remember Carlton sheets, whatever happened to that guy on the infomercial, he ordered the book and I read it. And I was like,

Stefan 6:05
Well, now what you know. So that’s what’s totally amazing about you and your group, you have the whole, it’s like a whole factory. It’s just all set. You know, all the pieces are just one email or one call away. Well, I think it would have been impossible for me to get into this, if it were not for you. So I truly appreciate that.

Jason Hartman 6:23
Oh, thank you so much. That’s so nice to hear, you know, it would have been possible, it just would have been a lot more difficult because as I mentioned before, you know, I basically started this business to be my own customer because I tried to do it. And it was super hard. So that’s, that’s the thing. It’s getting a little noisy out there with the crowd. Tell us a little bit about yourself just real quickly, and we’ll wrap up and we’ll go into the segment we’ve got we’ve got a what we’re going to do today on the podcast, by the way, is we are going to be a fly on the wall at the last venture Alliance meeting in Las Vegas. As one of our members talks about just being productive and being successful. He just gave A little impromptu talk just sitting at the conference table. And I, again recorded it just with an iPhone. So it’s not super high quality just like this isn’t but it does the job and the contents good. So I think everybody will like that. But before we get to that, did I mention what do you do for a living?

Stefan 7:15
My careers in I’m a physician, and I practice out in Northern California. I do primary care, and, you know, having an income that’s not a problem, but it’s the actual as I said, you know, the investment, figuring out the time getting things together, that’s the hard part, you know, in my busy career, but with with this with your recipe for success, there’s nothing nothing I’ve seen that’s greater than yours.

Jason Hartman 7:41
Good. Well, hey, thank you very much. How many properties do you have now? And what are your plans?

Stefan 7:45
Well, I actually have 200 contracts and one this time so three, and I’ve won out from a long time ago that used to be my principal residence, but uh, yeah, super excited about Yeah,

Jason Hartman 7:56
good, good stuff. Well, hey, thanks for Thanks for letting catch a ride with you the other day and see another market that we kind of been considering a little bit too. So appreciate that. And let’s just wrap it up anything else,

Adam Jackson 8:08
Adam? No, you know, I just wanted to say that I appreciate everything that your network does. Again, I was looking through an old goals book yesterday and saw that my my annual goal by June 1 was to acquire one income property.

Adam Jackson 8:23
So I definitely surpassed that I had zero added a zero to that. And also months in advance. So, you know, I appreciate everything that you and your network does. And, you know, it’s been it’s been a great experience I looked at can look forward to continue doing

Jason Hartman 8:38
this. Yeah. Thank you so much, guys. I really appreciate that. And listen, you are the customer, you’re the client. And so we appreciate you more than anything. So thank you, and thank you for coming on today and just sharing your experience with the audience. I just want to remind everybody, because it’s come up a lot this weekend. A great little segment that you all want to hear is go to Jason Hartman calm Use the little search bar there and search A Tale of Two brothers. Okay, because that segment has come up a few times this weekend. And I think it’s really important for people to hear that there’s a little podcast on that. Now I got to make sure it’s titled that. I said that without actually searching it myself, but I hope it’s that that exact title so you can find it. But that is a past podcast you definitely want to hear. And I know you guys relate to that. So again, thank you both for coming on. Remember, you’re listening to flashback Friday. Our new episodes are published every Monday and Wednesday. Now we’re going to be a fly on the wall at the venture Alliance meeting in Las Vegas, as we listen to one of our members talk about being productive and successful and this guy is super successful. So I think you’ll really get it was a great little impromptu talk. And again, our audio quality is not that great on this one. But we always try to bring great content sometimes it’s spontaneous as it is right now. You know the next episode why better audio quality, but I think you’ll love the content for both of these segments. Thank you so much. And let’s be a fly on the wall at the venture Alliance meeting. Here we go. Okay.

Jeff 10:21
Yeah. You want to go up to the morning? I’m fine here. Alright. Good visualization. Yeah.

Jeff 10:30
And I’ll talk to you guys one on one about

Jeff 10:35
daily business practices.

Jeff 10:38
And so one of the things it started off really elementary to me It started you know, with cliche, obviously call you hardcore readers in here, but the Tim Ferriss book when the very first came out the four hour workweek, it revolutionized a lot of the way that I did things. It’s constantly evolved over time to where I would have a daily power list for pointed out the day so I know that my task at hand I’m very, I’m very task oriented task oriented person. Funny enough, my wife knows if she wants me to actually get anything accomplished. She’ll write it down, put a checkbox beside it as I go down the list. It gives me fulfillment too. So the thing that we’ve morphed into the most recently, I really truly believe fitness business relationship based, it has to be a daily commitment to the long term goal. So we broken things down and reverse engineering and reverse engineered in the business. Obviously, we all talk about annual goals. I relate things a lot back to sport. So obviously at the beginning of every NFL season, the ultimate goal is to win the Super Bowl, but what you have to accomplish on a daily basis to be able to do that so we break things down to the quarter. We like to do 90 day stuff. And we go for the the entire person. Okay? Not just business goals, but we do body being balance in business from Our main main focuses. So we have a core four format that we roll out for our 90 day goals. But we always ask we’re going back to the why on a lot of stuff. What am I choosing? Why am I choosing it? What day will I focus on it and how I go about getting it done. And then on a weekly basis, you have to outline one thing to accomplish per day. I my entire week on a Monday, Monday’s my preparation day and all my management meeting with all my key figureheads. I light up the entire week. But I have one primary focus, like you mentioned earlier, the rock analogy, it’s a great one. If you don’t schedule the important things for everything else is going to take over take over your day. So you allow the day to get away from those knees. So if you put in the four large stones first then you can fit in the gravel then you can fit in the sand if you truly be full once it’s built to the brim of water, but if you don’t make the time for the most important things in the day, or like I said, I have one focus every day. I have one thing if I accomplish this my day was successful if I win the day when the week when the month you know, so we’ll use an example of like

Jason Hartman 13:06
a one thing per day focus. Yeah,

Jeff 13:08
no, absolutely. I’ll get into what we do. And I’ll get into what my current core nozzles are. Yeah. So we call we call the the weekly or daily process. My one thing my key four, and they have to be something obviously, that are going to go to a focus of hitting my quarterly goal for whatever it is between, like I said, body being balanced business unit, someone asked earlier about reading, how do you how do you read so much? I get that question a lot. Jeep sounds like most of you read way more than I do. But I’m focused a lot on four main things every morning. I do standard words of encouragement. That can be as as small as telling my wife I appreciate something she did for me. That could be messaging a business partner say hey, I’m thinking about you. I appreciate you. If not for you. I wouldn’t be me. That could be Tell my son, he played a great game last night. You know, just a word of encouragement to somebody. Okay. The director wants to listen to one podcast every morning. It’s a morning ritual. It could be for motivational it could be from the how I built that series that could be in that CEO. I don’t know, if you guys turned to that or not, it could be Tony Robbins, it could be Cardona. It could be, you know, most of the time with me, I need someone that’s gonna fire me up. And so you know, where I can get a lot of the educational side on how I built that, which is really cool. A lot of times I like to be fired up and and it’s a great podcast. Yeah, it really is really interesting. But then I also read 10 to 15 pages every day. So it’s a daily focus, daily commitment to read whatever book that we’re practicing, and then also have a daily commitment to my body. So it’s not necessarily always just exercise, meditation. It could be stretching, just anything to get the blood moving first thing in the morning, like I said, whether it’s a full blown going to the gym or anything, but I have So my daily count or my weekly calendar looks like this, I have my first four on the top, check them off as they do them every day. And then my daily focus for that day. And then off to the side is my weekly focus for my key four, and always be reminded about what my core four is for that quarter in order to accomplish so. So like, right now, to give you an example. And everyone can be a little bit different on this. I mean, it just depends on you know, what if you’re just starting, like in a fitness journey and stuff like that, you know, a lot of people like, you know, what could you still accomplish on fitness or anything like that, but it’s always different. Like right now I chose to do in this, you know, this is goofy to most people, but that’s okay. My son, my oldest son’s been in the basketball. So it’s all about increasing the vertical leap right now. So I’m committed right now with him to do jump training. I do drug training with him twice a week. It’s good bonding time. This is something that you know, I can dunk a basketball right now, but I want to be able to be able to do whatever I want, like I used to do, but then I break down to why I’m choosing it. So I go into great detail specific detail about why I chose this specific task of job training. Okay, what day Am I going to focus on it? So you need to have a commitment or planned time to be able to focus on it or what day is going to be accomplished on, and then how I will go about getting it done. Anytime that you can be more specific to the task at hand are more specific to the goal. If so, I don’t remember who was talking about digging deeper. The main objective so you say the old sales cliche is, what do you think about it? Yeah, but what do you want to think about? Is it the money is it the time is it the commitment is you’re too far away or too close? Is it the colors, you know, and that’s how I take and break down every goal to Okay, you want to lose weight? You said? Why? Why do you want to lose weight? I want to be skinny. Why do you want to be skinnier? Well, I want to fit with these jeans. Why is that important to you? What makes me feel better? You know really digging down to the root cause of you know, I don’t like the word why I love the root cause of why exactly. Tell me specifically why Yeah.

Jeff 17:05
Yeah. And so that, you know, you know, having a lot of millennials that I work with you they always ask about the why and I’m more about the why not more more than anything usually, why not me? You know somebody’s gonna do it why not us? Why not me? But anyway oh, like I said, the more specific it anytime you are in a business plan or strategy or anything you know, and you’re detail more commitment you are to the actual task at hand too. So I did two parts on my body for my 90 day deal. I do food as well. I’ve been in the process of trying to just do overall size reduction was about 290 a couple years ago. So what am I choosing I have here to 10 to 12 calorie per pound of body weight. And then I do a Saturday diet time out because I don’t like to use the word cheap because I think it’s a nasty word. And then I say specifically why I’m choosing it. And then I say what is my gonna focus on it on and I tell about specifically how am I going to accomplish this in mind Basically, I track all my macros that spoke to me about the macro tracking to on My Fitness Pal. And that’s how I keep control of all my breakdown, percentages, carbs, proteins, fats, whatnot. On my being, I had two different parts that I’ve been working on, I’ve never been, you know, is you start to, you know, the how I built that series or when I just read, like, or when I meet like minded individuals, it’s really nearly odd how similar most of us are, we have the same rituals to say, you know, I’m a guy that we literally have the exact same day. I’ve never met the guy before my life, but we know what your day normally look like, Man, that’s exactly what my day looks like. So, meditation is a key factor that I’ve seen in a lot of highly successful people. And it’s just something you know, I’ve been to prayer that meditations different, you know, it’s, you can download an app headspace. I don’t know if you guys use that or not. Yeah, but it’s just it gets you into when we talked about, you know, lying in bed and the productive minds. spinning out of control. And meditation helps to you to focus on, you know, Tantra or saying or a visualization to erase the mind or to stop the mind or to focus the mind onto one key point. And like I said, most of the biggest minds in the world ever in history where meditation was a part of daily practice. So it’s, you know, if it was good enough for him, it should be good enough for me to if it did I break it all down to why am I choosing it? Why Why did or what am I choosing? Why am I choosing it? What am I going to focus on? How do I get it done? On the study focus, mine was to do daily commitment to read the Bible. So I have a Bible app downloaded on under we haven’t discussed a couple of sets discuss religion here, but I’m hoping Christian, just throw it up there. So I have a Bible app and it gives me a scripture of the day to walk me through the Bible for 365 days. But then I go into detail about why it’s important to me and all of that, on balance. A lot of times the hardest thing that I ever transition is you have this Essentially play in life when you’re going through business between all these different things I’m talking about. And usually at the beginning of life, when you’re in the entrepreneurial mindset, you’re all the way over here on business and the families and the collective and your body’s neglected your balances and all put together as one. And so, you know, I would, I would come home and work and I would get up and work and I would go to work and I would miss kids things, you know, early on, you know, working 80 to 100 hours a week. So my biggest thing as I’ve gotten older is is the true balance of life. So, being in the true moment, choosing to leave my phone and go watch a basketball game or soccer match or something like that to where that’s gonna handle itself. It’s gonna be there when I’m done. You know what I mean?

Jason Hartman 20:45
Just a reminder, you’re listening to flashback Friday. Our new episodes are published every Monday and every Wednesday.

Jeff 20:55
So the balance is really important to me because I think true success is not just Financial number, you know, it’s it’s, it’s being a good father being a good husband, it’s being a good business partner as well. It’s taken care of yourself as well, you know what I mean? So there’s a lot that goes into makes up to what I define success as now, which is polar opposite of what I thought it was 20 years ago, it’s just about money back then it really was. So in the relationship, that’s where I come into the balance with the words of encouragement, the daily words of encouragement. And again, on each of those two relationships, one was about my direct family. And I chose to use a daily words of encouragement the others to my business partners and Associates, because I think a lot of time, we don’t give people enough gratitude for what they do. And I know with everyone that’s in my strategic alliance, I wouldn’t be able to accomplish what I’m able to accomplish, if not for them, so I’m only as good as they are. Truly so. Yeah. How do you do that with a phone call a step by visit a card versus just text or email. Yeah, that’s a question it depends on it depends on the person he sends me flowers. Yeah, every day. It depends on how much normal interaction I have with an individual. So if it’s someone in the office, obviously, it’s face to face, or, you know, wait to phone call, because these are things I usually accomplish first thing in the morning. So it just depends on how early in the morning it is, like I wouldn’t call someone you know, if I would happen to wake up really early that day. So it just depends that’s subjective to the person I’m dealing with, but it’s typically a text entry questions with the kids, it’s different my direct family, you know, I obviously I tell them in person, but even then, you know, sometimes I’ll write just a note and stick it in their, you know, backpack or stick it on, stick it on the steering wheel or, you know, something like that, too. So, it’s just one of those things, people it’s nice to let people know that you care, you know, even though we all really know. I mean, it’s nice. It helps people the the affirmation helps people, you know what I mean? on the business side, the studying that goes more into the daily commitment to reading for whatever book is at the time, that But also the daily commitment to just podcast man. Like I said, I started implementing it a long time ago and I feel my day more productive when I start my day off right at the beginning, I thought it was the selfish side I thought, you know, you’re taking two three hours in the morning to get all the stuff you could be staying busy work but I realized that my days more productive when I start my day with this pattern, so then teach and grow. So like I’ve talked to most of you one on one I try to manage everything for multiple projects and strategic partners that I rely on on a daily basis to manage daily operations. And I tried to manage everything from a 10,000 foot view in having making sure like a you know, talk to you guys about have to be in line with the balance in the values and the commitment and the drive and the long term vision of whatever company you’re looking you’re looking to grow. And Miss hire like

Jeff 23:55
misfire in my opinion is just as bad if not worse than not hiring someone, it’s better just to wait. So you know, we’re big into the hiring process, making sure someone fits our mold and make sure someone is a good Apple for the whole bunch as well and shares the same vision and values that our companies believe in. So how many employees do you have? Ah, man, overall with everything, I would guess, three to 400 500. Like those are no employees. Really? Yeah. Yeah. I mean, between all the clubs and everything, yeah. Wow. Yeah. Home Office, home office? Probably. Not probably you have 14 and home office. The health clubs are what rise it up so much, because your average Oh, yeah, there’s a lot. Yeah, you have Yeah, so direct employees and that daily interaction with less than 20 less than two, okay? So they’re really what I try to focus on is my my main 12, my main 12 guys and gals that have the direct daily focus with everybody else. So that’s, that’s my core focus, and then they pass down those values and beliefs to everybody else. So You directly manage for working people you don’t have? Well, that would be in a tiered system. So no I do not direct are getting a little. So home office has 14 direct employees through different companies. So property management company debt negotiations company, real estate investment company and then a real estate brokerage as well. Now, I have other companies, sports supplement companies, health clubs, new construction, and then revitalization company or innovation company as well. So Mike, in a product brand design company web development company, but my focus is on the individuals at each of those. Okay, how do you Report View direct 12 to 14 on average, Devin? Yeah, and you’re able to manage that. Yeah. But I said so Mondays, Mondays is our meeting today, but it’s one of those things too. And so every every two hours on a Monday I’m meeting with all the key figureheads in the biggest thing that I really we started doing about it six months, eight months ago. We do in the middle of that day. We bring everyone in the same room together roundtable discussion we do similar to what you’re taught what’s a hot seat? what’s, what are the problems and the pitfalls of last week? How can we brainstorm collaboratively to lift each other up, you know, rather than pull each other down or feel that we’re in competition, because we’re all here for the same common goal, same value, same desire. So, yeah, if you It goes back to the to the focus. So you know, if, if people call me during the day, and I’m just blunt with people, if you’re not on my list for that day, I’m not gonna answer the phone. That’s just the way that it is. Because, you know, I learned that there were so many times where I wouldn’t answer the phone, I was reactive. I chose to intersect myself or insert myself as a reaction, and they could have figured it out on their own. I told a couple guys about this, I’ve learned that I don’t want to create a Dewar. That’s micromanaging. I want to create a leader. So I want suddenly nailing exactly you’re choosing to to put them on that path to follow this list. You know, and I can say that because I’m a list person too, but it’s my list. I have ownership in my list prior to voting. In it anytime that you allow someone to go out on their own, and you take that risk, you know, you take that risk. But even if someone could do something to 50 to 80% effectiveness as you eventually as long as they’re training up, they’re going to constantly grow and get better and better and better and better. And I would rather have 10 people at 50%, obviously 500 as opposed to me at one or 100 just because it’s not rational to think and you can’t grow the economy of scale, like we’ve talked about, this doesn’t work that way. So that’s how I operate. It’s all on my daily side. So I just wanted to share that

Jason Hartman 27:33
Yeah, awesome. Really good. Got 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 heart and Mediacom for appropriate disclaimers and Terms of Service. Remember that guest opinions are their own. And if you require specific cific 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.

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