This episode of the Creating Wealth podcast was recorded during the Oklahoma City JHU Live event. Jason Hartman talks to new income-property investors, David & Gina Nelson. They share how they built their wealth by investing in income properties. They also discuss the value of understanding the linear, hybrid, and cyclical markets. Lastly, they convey their appreciation for the transparency and support they have received from the Jason Hartman Investment Counselors.
Announcer 0:00
This show is produced by the Hartman media company. For more information and links to all our great podcasts, visit Hartman media.com.
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 on now. here’s your host, Jason Hartman with the company leet solution for real estate investors.
Jason Hartman 1:04
Welcome to the creating wealth show. This is your host Jason Hartman with episode number 854. And I am doing something I have never done before. One time on a prior episode, I was on the plane recording an entire episode on Southwest Airlines. And now I’m doing something different today. We are actually at the jQ Jason Hartman University live event in Oklahoma City. And I am walking back with a couple of our wonderful attendees. They agreed to come on the podcast last night when we were at dinner. So let’s introduce yourselves and tell us where you’re from.
David/Gina Nelson 1:39
I’m David Nelson. I live in Folsom, California, currently,
Jason Hartman 1:44
right by Folsom Prison where Johnny Cash did his famous concert right?
David/Gina Nelson 1:49
Exactly, yes, fabulous place.
David/Gina Nelson 1:51
Okay, and Gina Nelson and why for 21 years here. He forgot to mention that I was married to him.
Jason Hartman 1:59
There you go. Good stuff. Well, we are walking along here walking back from lunch to the hotel to continue the day. What got you interested in real estate investing?
David/Gina Nelson 2:09
Yeah. So, Jay and I have been looking at doing something different after becoming entrepreneurs in the business side.
David/Gina Nelson 2:17
And because we began to
David/Gina Nelson 2:18
realize that the the societal norm of working 40 hours a week for 40 years, and putting all your money into an IRA, which you’d have very little control of, didn’t make any sense to us anymore. So we decided we needed to take more control of our lives and in the form of investing in real estate and do something different wealth building. And it’s it’s not something that we would have done even a year earlier. So the timing was perfect for us.
David/Gina Nelson 2:46
When when Khan introduced us to it, and
David/Gina Nelson 2:48
then we bought our first property in Atlanta, Georgia, and that’s worked out great. We bought several in Memphis and we have a couple in Ohio. But anyway, it’s
Jason Hartman 2:55
the first one. The first
David/Gina Nelson 2:57
one we bought April 2016. Yeah, and that was that was great. And so it really, like I said, and what’s really, really critical is that I loved I found out that I really, I really love the business side, I really love the analysis of looking at real estate, and making those decisions and running the numbers and keeping track and, and about to use property tracker for that. And it but that I found out that that was really something I was passionate about. It’s it’s I haven’t been really passionate about something work, you know, income related in years. So this has been a really different, different mindset shift for us.
Jason Hartman 3:40
That’s fantastic. Well, you know, since you’re a couple, do you sort of divide up the work? Do you have different areas of interests when it comes to real estate investing?
David/Gina Nelson 3:48
Hi, well, David’s really been kind of spearheading all of the real estate. I’ve learned a lot just from him, but I got to come out to Ohio to Ohio property tour and that’s when I got to actually go beyond just listen to your body. And actually see you in person and and really learned
Jason Hartman 4:02
so much more. Well don’t forget the highlight you met Coco. That’s correct. That’s the dog.
David/Gina Nelson 4:07
And you know, we just fell in love with the area with the property managers. And then the trust of being able to, to look at this as a as an idea of investing became so much more of a real reality for us. Again, we both were corporate rats, we’re, you know, got master’s degrees and have done what our parents taught us to do, which was invest in put more than 75% of our assets, and, you know, IRAs and in the stock market. And as we started reading books and educating yourself and listening to Jason’s podcasts, we realized that that wasn’t necessarily going to get us where we wanted to go, we were watching our investments just completely go the opposite direction. And so this became much more exciting, and it kind of opened the lid of what was possible for retiring earlier and being able to just really have a portfolio that’s completely different than I’d say, 90% of the folks that have been in our life. I mean, they they think we’re crazy. They don’t even can’t get their heads around this concept of what we’re doing,
Jason Hartman 5:04
because they’re all putting all their money into their 401k. And just doing that traditional Wall Street thing that we’ve all been conned into doing, right? Yeah, good stuff. So in terms of investing, and you know how you feel good about it now? Do you feel really good that you have more control over your life now? Does it feel that way?
David/Gina Nelson 5:24
Yeah, I think so. Definitely. But before there was no end to the corporate race for us, it was just keep working, keep working. And if we hit 65, and we’re healthy enough, hopefully we have enough to retire on. And that was putting all the trust in somebody else. And so being able to be around like minded people, see how they were investing, see the tax benefits, all the things that we’ve learned, I mean, absolutely have hundred percent more control than we used to have.
Jason Hartman 5:50
Yeah, this is what it’s all about, folks, be a direct investor. commandment number three, thou shalt maintain control. It’s a very, very powerful if for no other reason than it It just feels good. If if the returns were as low and crappy as they were on Wall Street, I’d still rather be in the real estate investment business because you know, at least you’re in control and you don’t feel like you’ve relinquished your future to somebody else with a with an ulterior motive. So what what other things would you like to tell people about your investments or your your philosophy or approach to real estate investing?
David/Gina Nelson 6:23
Yes, I’d love to hit that one. Um, what I’ve learned is you like to mention be area agnostic is one of your commandments in that I love that. I like to look at this is also be when it comes to real estate investing, be age agnostic, who cares what age you are, you can start doing this in 19, like you did, you could start doing this in 20s you can start doing in your 50s.
Jason Hartman 6:46
I started my 50s. I’ll tell you our oldest client is 86 years old when he started so now he’s got to be about 93. And man, he’s a retired doctor and just wanted to build a portfolio for his grandchildren. I mean, I wish I had a grandfather like that, but Oh, well. But yeah, you know, it’s never too late to start. And the deals, of course, are never as good as they were in the past. You know, you always have to buy something that has good value, and wait for it to play out. But that’s, I love what you said about the age thing. It was very good.
David/Gina Nelson 7:19
Yeah, um, and I, you know, it’s, it’s really, it’s really kind of morphed into our children starting to pay a lot more attention. My son at 99. You know, he’s starting to listen, actually, my son started listening to your podcast. And he’s 19. And he, like, bought his first vehicle with cash. He’s, he and I explained to him about how, you know, he listened to you. He knows what good debt is. Now consumer debt bad. Yeah, you know, but so he’s, I, you know, he’s on his road. I said, if you get out if you get in your 20s, with your first property, kind of like Brandon’s doing.
Jason Hartman 7:54
Brandon is one of our venture Alliance members and clients who’s here at the event,
David/Gina Nelson 7:59
right, and he’s in military guy to and he’s
Jason Hartman 8:01
now 30 and he’s got I think seven properties. Yeah,
David/Gina Nelson 8:04
if you do that you he’ll be I told him, you’d be a multimillionaire you’ll have a million several million dollars in assets by the time you’re in your 30s and doing it methodically and doing the daily disciplines and doing it and never not quitting and, and learning and actually learning. Like us. You said Jason is, you know, we didn’t have analysis, paralysis or paralysis of analysis, I should say. When we started this process, we I listened to podcasts for about a month and I said what the heck I started learning on my first job was Sarah, she was awesome. Investment counselor Sarah Lisicki. She was phenomenal and and then like Michelle Hawkins and people like that we met and Steven Lockwood and those guys they they helped us open our eyes to you know, taking money out of our actually putting less money on our for our coat for one case where the company matches only to that benefit and putting the rest aside for buying real estate. So that’s what we’ve done. It’s been fantastic.
Jason Hartman 9:04
Excellent, excellent story. Okay, so now we are on northeast Second Street here in Oklahoma City. Which way do we go to get back to the aloft hotel where, where we have to finish up the afternoon. By the way, I’ll just tell you, I’ll sort of interrupt the flow of the your story in your case study for just a moment and say that at lunch here today, we played the portfolio builder game that we do with the Jay Chou events. Let’s cross the street here. And how do you like this, folks, this is a very homespun podcast we’re talking about crossing the street. On the show. The portfolio builder game requires people to break into teams and take a batch of properties 10 properties, it gives them a budget of in this case today, we play it different each time. But today, it was $150,000 and a limit of five, Fannie Mae Freddie Mac, conventional loans, and then you have to optimize it for different things. For example, buying the most real estate, right? The biggest portfolio, you have to optimize it for the best cash flow, optimize it for geographical diversification, for ease of management. So there are several optimization strategies. And that’s one of the one of the sort of frustrating questions I get asked over the years all the time, as you know, well just tell me the best properties to buy and buy them. Right. But you can’t do it that simply because it depends what you’re looking for as an investor and what you want to optimize for. Right. So yeah, what other thoughts? Do you have just anything you want to share?
David/Gina Nelson 10:34
I just wanted to say one thing before Gina grabs up.
David/Gina Nelson 10:38
She let me tell you how critical This is, is having some support system not including Jason Hartman University folks, but my mice, my amazing spouse has been the biggest supporter of mine and biggest encourager, and I wouldn’t been able to do without her. So she is by barn on the biggest impact in my life. So
David/Gina Nelson 10:57
well, to kind of piggyback on that, I just was gonna say that The whole idea of the support team is huge because we didn’t know anything about real estate. We were not realtors, we just, you know, we were just homeowners. And so the whole idea of investing was really foreign to us. And so you know, even to sit with this group that we’ve been with today and do this project over lunch, which was really eye opening to have different minds kind of putting their input in and telling us, oh, no, we got a look at this variable or no, let’s look at this variable instead. And all of that was just really very helpful for me to kind of look at the portfolios and go Okay, now now, what are we looking for in the next five properties?
Jason Hartman 11:32
Excellent. So as we board the elevator, this is like a, we’re giving you the visual tour here, as we push the up button on the elevator, and that’s what this is about moving up in life. So it’s a good metaphor, you know, we’re Upward Bound with real estate investments. But yeah, you know, the point of that portfolio builder game is there’s not really a right or wrong answer. It just makes everybody think, and I think that’s that’s the point of it. So it’ll be interesting when we get back in the room to have everybody Talk about each team leader will present which properties they chose and why. So both of you are believers in higher education? Well, I think you are, at least you did the higher education route, you both have master’s degrees. You’ve heard me criticize the college conspiracy a lot on the show, of course, because and I don’t think education is bad by any means. I think it’s wonderful. I just think it’s massively overpriced. But there is a way to combat that. And using income property investments to fund higher education for your kids, right? Tell us what you both do for your occupation. And then talk about that strategy if you would.
David/Gina Nelson 12:38
I’m a clinical social worker. I worked for Kaiser and the pallet as a palliative care social worker. And on the side, I have a side business and I’m a health coach.
Jason Hartman 12:46
Fantastic. So you probably see some, some pretty difficult experiences in your business and palliative care, I bet.
David/Gina Nelson 12:54
And it’s, you know, and it’s like everything like every corporate job. It’s a commute every day and a long day. I’m emotionally and the mindset is very different in that environment than when I’m around people that are investors and are really looking at building wealth for themselves in the future,
Jason Hartman 13:10
more a more positive environment,
David/Gina Nelson 13:12
a more positive, a, you know, a lot more exciting and people don’t understand when I say I’m gonna retire at 45 next year, they go, what do you mean by that? I said, Well, you know, we have a plan, we have a plan. You know, I believe in higher education. Absolutely. I’ve got my master’s degree and I want our kids to go to school, but at the same time, we have some so many friends whose kids have come out and had $200,000 in student loans and, and we needed to have a solution and a plan for how we were going to help pay for that. So they didn’t end up like that. That is excellent. That is excellent. Okay,
David/Gina Nelson 13:40
what do you do? I’m actually in the computer science field. I got a computer science degree back in the 80s. And I you know, but to piggyback on what Gina was saying, I’ve been an IT supervisor for years in the healthcare field. But you know, and was planning on doing that into my 60s and and living off our great 401 K’s. God knows what those would have done. But now what we’re really looking hard at is with Gina was saying with so many people graduating with literally six figures in debt and higher than mid six figure, it’s crazy. We said, we are not going to allow that to happen to our youngest daughter. So what we’ve decided to do was we’ve been building our portfolio and looking not looking at cash flow really, probably harder than maybe some of the other metrics. Although we look at cash on cash we look at, we look at ROI, but we’re really looking at that, as we will get 10 doors and have $36,000 in cash flow for the year an annual obviously, and that will pay for my daughter’s college. So that that was that was our that’s our plan right now. And we’re well on our way to doing that.
Jason Hartman 14:49
Congratulations. That is awesome. That is totally awesome. Good for you guys. That that’s fantastic. You know, one of the things that’s been, I think interesting to people here is that we you know, we talk about income property and how it produces a multi dimensional return on investment. Unlike many other assets that are either one or two dimensional at the most income property is multi dimensional. And a lot of this return on investment is sort of like the iceberg. It’s below the surface of the water and you don’t necessarily see it unless you know how to really think about it and analyze it. And I think that’s been I don’t know if that was an aha moment for you this weekend. But it has been for other people I know because they’ve told me and you mentioned that cash flow is just one of them. So you know, it’s there. There are many metrics you need to look at and understand as a real estate investor. What do you think about that? iceberg concept, like most of the iceberg being below the water when it applies to income property?
David/Gina Nelson 15:42
You know, I learned well, I’ve always learned something at one of these events. But um, but I think for me, you know, again, the, it’s changing the mindset of the corporate, you know, you’re just gonna go one way and you know, we were getting killed in taxes being six digit salary, folks, you know, on the W twos, we just had no other way. to diversify and and, and find, you know, other options so so being able to have the property and learn about depreciation and inflation, deflation, all these things. I mean, it’s it’s been really mind boggling to me to see how valuable it has been for us as we’ve collected more properties and really diversified our portfolio. It’s changed our financial situation drastically.
Jason Hartman 16:21
Yeah, that that is excellent that it has but it is. It’s so true that typical corporate thing, it’ll just leave you for it. So sort of simplistic do this basket of stocks, your 401k blah, blah, blah, and it’s so unfair to because earned income, you know, you’ve both got six figures plus salaries, and earned income is taxed at the highest rate, and it’s the hardest job to write to do the typical corporate job. It’s unfair from two perspective so you know, breaking free of that is definitely what we’re here to help people do and I love how you have a plan and you’re really talking about like, you know, like Fernando said before, the financial Independence Day. Right, right.
David/Gina Nelson 17:01
Well, you know, what was gonna say just also, I forgot to say, and we live in California. So we live in a very cyclical market. And so, you know, one of the things that’s been the greatest value for us being exposed to Jason Hartman has been, just to understand what a linear versus a cyclical market looks like. And for, you know, some of our friends that flip houses and try to time the market and all that, you know, that was something that we never were, you know, we weren’t real estate people, we have a clue how to do that, or to actually do that well. And, um, so having something in the, you know, more, you know, linear environment has been very helpful for us to be able to pick those things up and diversify and not feel like we had to come out with, you know, $400,000 to buy a house because some of the other areas have been more affordable for us, and yet, they’re all producing positive cash flow, which has been amazing.
Jason Hartman 17:44
Yeah, so just for those of you who don’t know, Folsom, where they live is up by Sacramento, California. Very hot real estate market, very cyclical, very expensive now at this part of the cycle, but that’ll change I promise. There’s always a cycle and you You know, you could you could risk it all on one flip. I mean, you know, because the properties are so expensive. And you know, like you said, having to put $400,000 down to buy a property. That’s just a real risky deal. If you time that flip wrong, that could ruin your right. Yeah. So yeah.
David/Gina Nelson 18:15
So I did piggyback on that we, I mean, it’s like, an example that we had a $500,000 house that was not fixed up in our neighborhood, a three to 1700 square foot.
David/Gina Nelson 18:27
I mean, what it’d be where’s that where’s the basis for that supporting that value? It’s, it’s, it’s there isn’t one so
David/Gina Nelson 18:34
so that that’s why we were and what what we’re doing now, by building this wealth in real estate is we’re also decreasing our exposure in the stock market at the same time because I took a look at this in February of 2016. And I said 80 over 80% of Jean, my, our personal wealth was in real estate market. I said stock market, sorry, sorry, stock market. Thank you for that was in the stock market. And I said we have very little control over that, and thou shalt maintain control. So we’ve really been working hard this past year to responsibly divest ourselves of that where we can. And so, you know, I took one of my previous employer pensions, cashed it in and bought two houses with it. And it’s like that because I have control of that asset and not looking at some fund manager who wants to make his bonus and doesn’t care what happens to us being at the mercy of them so yeah,
Jason Hartman 19:28
and and since the subject of timing came up, you probably either by accident or on purpose or timing that fairly well because the stock market is looking very overvalued at the moment.
David/Gina Nelson 19:39
Absolutely. And what I you know, and there are corporate related 401 K’s we can’t really can’t do a whole lot about right now. We’re doing everything we can to maximize it without throwing any more money than we have to in it. But I’ve moved like a quarter like a bunch of my money into guaranteed returns because I know the crash is coming. Everybody else says it is we just don’t know when. So I’m going to minimize the damage that can happen there. And then when I can get at it, I’m going to take that money and it’s going to go into real estate.
Jason Hartman 20:10
Excellent point. Excellent point. Well, we got to wrap it up in case the listeners haven’t noticed we’re back in the room where where people are meeting and you’re probably hearing some chitchat and laughter in the background as we come back from lunch here and reconvene but just any final thoughts you know, maybe just a final thought from either of you. Thank you so much for being on the show today really appreciate it. It’s always listeners love hearing these stories of real people that are doing it rather than me talking about it in theory, you know, right. I mean, my knees practice too, but it’s so nice when you hear different perspectives, you know, certainly so so we’ll just wrap it up with any final thought I give a quick
David/Gina Nelson 20:45
one here. And if if you’re you know, out there and you’re you don’t know where to start, get a mentor. Every every bit of success I’ve had in business and in corporate, I’ve found a mentor. Jason Hartman is an amazing mentor. He’s transparent Everybody I’ve met through his organization has been transparent and honest and ethical in it, you, I, they, they, they tell you about the exposures upfront, you know, it’s, it’s on you, you’re gonna have to learn how to do this, there’s going to be things that can happen that you can’t control. But finding that mentor is crucial. And we’ve found, we found it here. And we’re, we plan on being this for very many years to come.
David/Gina Nelson 21:22
Well, and just for us, I mean, it’s it’s listening to podcast, educating yourself and not getting stuck so much in the details of all the education because at some point, you have to pull the trigger and take a little bit of a risk, which was, you know, kind of out of our comfort zone. But when you do that in an environment with a whole, you know, with the team, like Jason has you feel much more comfortable with it, the risk seems less than it would be of us just being completely on our own. And it’s been just an amazing journey of growth, personal growth for us, you know, to really kind of open the lid, what’s possible.
Jason Hartman 21:51
Excellent. Well, thank you so much for joining us. I will just wrap it up with a quote. Well, two of my favorite quotes, the one I shared this morning is that Zen saying to know What not to do is to not yet now, like you said, you have to pull the trigger and you just got to do things and figure it out as you go and iterate and change course as you go. But the other one, I thought was a really great quote too. And it’s I hope I don’t mess this up but because it’s just from memory, but it basically goes something like successful people make decisions quickly, as as soon as all the facts are available and change them very slowly, if ever unsuccessful people make decisions very slowly and change them often. And I think that’s just critical. You know, those two quotes are exactly what you said. One more thing I want to mention for you listeners, go to Jason Hartman comm slash contests. This is a new thing. So listen up. Jason hartman.com slash contest. There is one product that I think is probably the best product Apple has come out with in the last five years. And that is the apple EarPods those little wireless earphones and I absolutely love those things. There’s like a six week wait to get them. I bought For myself waited six weeks for it to come. They came. I’ve been using them for a couple of months now. And I’ll tell you, you talk about education a lot. If you want to be able to listen to more podcasts and education more easily, those air pods are phenomenal. It’s amazing when you cut the cord how convenient it becomes. And so I bought one of those to give to our audience. So Jason hartman.com slash contest, enter the contest there and just answer a couple quick questions and we’ll put your name in and we will raffle those off to one lucky listener. So that’s it for now and we will talk to you on Wednesday for the next episode. Thanks for listening and happy investing.
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