Jason Hartman starts off the show by sharing that investors must align their interests with Central Bankers. He also explains arbitrage or exploiting the differences in things as a real estate investor. Then, Jason Hartman becomes the interviewee in an episode of “Investor in the Family” podcast by Brian Bain. In the show, Jason explains how 30-year mortgages on single-family homes are not only a multi-dimensional asset class but also a tax write-off. He also talks about inflation, how the government deals with underfunded entitlement programs, and long-term investments.

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 complete solution. For real estate investors.

Jason Hartman 1:03
Hey, welcome to the creating wealth Show. I’m Jason Hartman, your host, thank you for joining me for episode number 638 638. And it’s great to have you here today. And I have only done this on rare occasion. And that is where I was interviewed on somebody else’s show. But I kind of thought the points were pretty good. It was maybe a good review of a topic we’ve done before. And I will play it for you on this show. So that’s what we’re going to do today. Your guest is none other than yours truly Jason Hartman. And someone else interviewing me. Occasionally we do this and this is one of those times I don’t think we’ve done it in a couple hundred episodes. So we will get to that here in just a moment. But first, I will share with you something that I wrote on my Facebook page today, and it will give you caused ponder. It’s a couple quotes from Ben Bernanke key and Then one from the brilliant old Yogi Berra, the late Yogi Berra. He has such great quotes. You know, I’ve shared a couple of those on the show previously. So yeah, Yogi Berra said, when you come to a fork in the road, take it, or the one I love the most, the future ain’t what it used to be. What an awesome quote. You really got to wrap your head around that for a moment to ponder it, but it’s it’s really good. Anyway, two from Ben Bernanke, and one from Yogi Berra, Ben Bernanke. In 2009. No one will lend at a negative interest rate, potential creditors will simply choose to hold cash, which pays zero nominal interest, says Ben Bernanke key or former or former Federal Reserve Chair in 2009. And then he contradicts himself massively in 2015. Quote, I think negative interest rates are something the Fed will implement should consider if the situation arises. Ben Bernanke 2015. I mean, this is unbelievable. And then the Yogi Berra says, in theory, there is no difference between theory and practice. In practice, there is awesome quote Yogi Berra, you know, it just goes to show you the central bankers around the world. They’re frickin making this stuff up. I mean, they, they really, these are not the brilliant people the world wants to give them credit for. They are simply human beings with their own agenda and their own self interest. And they’re making this crap up as they go along.

And we realize that the only real tool in their tool belt is money creation, actually, sorry, let me correct myself. Currency creation, to create currency fiat currency out of Thin Air, whenever the industrialized nations around the world meet, they have some big meeting in Davos, Switzerland or wherever it is, you know, Davos has only one of their big meetings or Jackson Hole, Wyoming or whatever, you know, they got their big important meetings for these self important people. They’re meeting to see what they can do to fix the world economy. And the answer, why do they need to talk about this for hours? The answer is, let’s just print more money. Let’s just create more money out of thin air. We don’t even have to print it anymore, because we can do it on a computer screen. So it’s just an absurdity wrapped in an enigma. I mean, it’s crazy. And then I posted a little picture meme, and it’s, it’s good. I like this one. So I’ll share that with you too. In the same Facebook thread. It says, give a man a gun and he can rob a bank. give a man a bank, and he can rob the whole world. It’s so true. Isn’t it? Oh, it’s just crazy. It’s just crazy. So we’ll see if we, if we really see a negative interest rate environment. We’ve got that in a couple places around the world. We talked about that before on prior episodes, and we shall see how it all evolves. We are living in crazy times, crazy times of financial repression, financial repression. And we as investors must align our interest with these incredible powers. You know, before I probably misspoke, as I often do, by the way, there’s my disclaimer, I often miss speak it like that one. And I said, these were self important people. They’re actually not self important people. They are important people. And the world has made them important. So we must align our interest with theirs. We must not fight it. We must we can bitch about it. We can complain about it, but we must ultimately align our interests with it. Because we know their interest will win the day, it always does. And that’s why we engage in lots of arbitrage. As real estate investors, we get probably more arbitrage type opportunities than any other type of investor. And again, my simplistic definition of arbitrage you know, go look it up, I’m sure you’ll get a much more academic definition.

Jason Hartman 6:28
But you know, me, I think, a lot of times simple things are the best. That’s why I think a good old internet meme on social media can explain things much better than some long flipping essay. You know, if you if you have to use a lot of words, you’re probably either hiding something, maybe you’re hiding the fact that you don’t understand it, right? And that’s what a lot of these people do. You know, the Fed comes out with a Beige Book, right? They got a lot of words to explain something which basically means Let’s create some more money out of thin air or currency sorry, misspoke again currency not money, there’s a difference money is real currency is fake okay currency is Fiat always by nature by definition. So, you know a lot of times a simple little meme can explain it well. So, what is the Jason Hartman definition of arbitrage Simply put, exploiting the differences in things, exploiting the differences of thing in things, right. So you, when you geo arbitrage you exploit the difference in geography, right, for example, pay scales in different geographies vary greatly. And that’s why we’ve seen so many companies do offshoring and outsourcing and, you know, moving to different jurisdictions where they can arbitrage the tax Nexus where they can arbitrage the payroll or the wage Nexus or they can arbitrage environmental Laws where they can arbitrage the cost of real estate or they can arbitrage all sorts of things in the sort of the Tim Ferriss movement, he and those people in that movement have got this term, they use a lot called geo arbitrage. And we can do that ourselves. I mean, I like to do that in my company. You know, I’m not too into the offshoring things.

I haven’t had very good luck hiring people in the Philippines or India. You know, maybe it’s a cultural barrier or language barrier, I don’t know. But it just hasn’t worked for me. I’ll put it that way. So I hire North American workers to work in my companies and to do different things and provide different freelancer, contractor oriented task for us. And I try to hire people who are living in a lower cost of living market. I mean, if I’m going to hire a person who you know is going to do a website for me, or, you know, edit a podcast and they live in New York City. They live in Los Angeles, California, or if they live in Miami or Boston, I know I gotta pay them a lot of money to be able to afford to live there. But I cannot hire a person who’s very bright, who’s every bit as capable in Phoenix, or Dallas or Austin, or Indianapolis or Atlanta or hay. Coincidentally, a lot of those are markets that we either recommend now or have recommended in the past, right? linear real estate markets, where the cost of living is reasonable, the cash flow is good, the LTI the land to improvement ratio. Another term I coined, the land to improvement ratio is favorable to us as investors using the Hartman risk evaluator to reduce our risk dramatically when we invest in those markets. I am geo arbitrage, right because I can pay people More than they can get working locally. But to me, it’s a bargain compared to hiring someone in a really high cost jurisdiction. So it’s a win win deal, we all win. It’s a win win deal for everybody. So arbitrage and as a real estate investor, we want to arbitrage as many things as possible. And there are all sorts of ways we do this with monetary and fiscal policy and tax policy, and rent to value ratios. And of course, we’ve talked about those extensively over the many, many years, and many prior episodes, but just keep that in mind.

And as you listen to this interview, I think you’ll get a lot out of it. Join us in Salt Lake City, coming up fast, March 12. We’ve got a great Jason Hartman University, a j h u live event there and a lot of you have registered already. So thank you for that. And just make sure you join us it’s going to be an awesome event. I’m really Looking forward to this event, and we’ve made this one a lot more challenging. So if you came when we did it the first time in August last August in San Diego, come to Salt Lake City. Enjoy a little spring skiing. I think you’ll have a great time there. It’s got the best snow in the world. Enjoy the natural beauty of the Salt Lake City area, great city love it there. also learn some good stuff at Jason Hartman University, we’ve got a beautiful hotel, they’re just really a great all around setup a great room block with some low rates. We did just recently announced that so you should have received an email if you’ve already registered with the booking link to book your hotel rooms at the bargain room block rate. And if that got filtered or you didn’t receive it for whatever reason, check with your investment counselor, and they will be glad to provide you with the information. And before we get to our interview. Here’s a little quick nice boxer message I got today that I wanted to share with you.

Listener Message 11:57
My name is Ross Johnson from Minneapolis Have I heard about you from Ryan Daniel Moran on freedom Fastlane. I’ve been listening ever since probably about 200 episodes now. I’m very intrigued in the Orlando market. Definitely checked into it. I’m very curious to hear what your thought is on vacation rental properties there. I’ve not heard you talk much about it. It seems like there’s a lot of upside. And I know you’re not big on a choice, but I just wanted to hear what your thoughts were on vacation rental properties in the Orlando area. Thanks, Jason. Appreciate it.

Jason Hartman 12:31
Hey, Ross, thanks for the message. Appreciate it and appreciate you listening to 200 episodes of the show. That’s great. You’ve only got about 440 of them to go. Anyway. Yeah, I have talked a lot about vacation properties over the years you know, on various episodes, and it’s not that I’m this is a statement on Orlando in any way. Noise But rather a statement on vacation properties in general, and I am not a fan of vacation properties. I think there’s a lot more management involved. There’s obviously a whole world of change that is occurring with Airbnb, in various sharing economy sites like that, that is changing the game quite a bit. There are huge tax implications that people don’t need to know about. And a lot of these owners that have vacation properties are going to be hit with big tax bills they don’t even expect and I’ve tried I have done some shows recently on that. So you’ve probably heard those episodes. And I’ve also I think one of those tax episodes is on the AIP is show. But you know, one reason that regardless of all of this stuff, that I’m not a fan of vacation from pieces because they’re not amazing And, you know, the economy goes down the tubes. The first thing people gonna start doing is taking vacations, right? So I’m just, I’m just not a fan. I think that stable necessity oriented housing is where it’s at. And, and that’s what you want to be investing. So I hope that helps. And I appreciate you listening to the show, and in referring your friends. Thanks again.

Listener Message 14:27
Hey, Jason, just wanted to say thanks for the quick reply. There’s some great advice there. Also, just want to say I really appreciate your show. And I’ve definitely learned a ton. I own two rental properties now that were bought and speculation and I was definitely led down the wrong path. And I’m very excited here to be getting close to having enough money to get back into this, but with a whole new mindset, so I really can attribute that straightaway to you in your show and all of your guests and I just I really, really appreciate it now. Want to let you know that Thanks, Jason, I have a great day.

Jason Hartman 15:02
But that’s the thing. See, I hope everybody will listen to my show before they go buying real estate on a speculative basis. commandment number five, thou shalt maintain. Well, that’s commandment number three. What am I thinking? commandment number five, Thou shalt not gamble. Do not buy real estate on speculation. Buy it, because it makes sense the day you buy it by cash flow, income producing real estate, it’s the only kind to buy. So definitely stick with that, and you’ll have a good experience. That’s the thing to do. So yeah, I know a lot of people have been led down the wrong path by many different promoters out there. The other thing that I did not address in that voxer chat there, by the way, sorry about the sound quality, I’ll try to only respond when I have better sound quality in the future. But the other thing is, I don’t like condos, as you know, and he did mention that. So again, avoid condos. Get yourself single family homes or get yourself apartment buildings but not condos. Unless you control the homeowners association, which you’re probably not going to do. So forget about condos and forget about vacation properties and forget about high priced speculative properties, income producing real estate, the non sexy stuff with good land to improvement or LTI ratios. That’s the thing to do. Let’s listen to the interview and hear more.

Brian Bain 16:29
Well, hey, Jason, welcome to the show.

Jason Hartman 16:31
Thanks, Brian. It’s great to be here on Investor in the Family. Love the name by the way.

Brian Bain 16:36
Hey, I appreciate that. It’s something we’re definitely excited about and also excited to have you here with us because a lot of our focus so far on this podcast has been on equities and will continue to primarily be on equities. But real estate investing obviously is your wheelhouse and I would love to use this opportunity with you to knock those doors open for some of our listeners. get a better feel for opportunities in real estate and how to make maybe make some first steps and kind of dip their toes in the water. But before we do that I would love to get or have you just introduce yourself to the audience to kind of give you a background as an investor as well.

Jason Hartman 17:15
Yeah, absolutely. Thank you. So first of all, today I want to share some truly new thinking when it comes to investing in income property. Okay stuff that your listeners have not heard before. You know, there’s there’s no shortage of hokey real estate gurus out there that promise you know, the world and, and and fast fortunes and so forth. I want to talk about the prudent tried and true approach to long term investing and some monetary policy issues and how we can align our interest as investors with the most powerful forces in the world, governments and central banks, okay. your listeners will hear some truly new ideas that they have not heard before anywhere else from other real estate people out there. Basically, to answer your question, the way I got started is I grew up fairly poor in Los Angeles, California. And when I was 16 years old, I kind of hit me, you know that money is a significant part of life. It’s important. You know, I didn’t think too terribly much about it before that, I guess I happened to be at home. And I was watching an infomercial. And there was a real estate guru on there. And he was talking about his book and how you could buy properties with no money, blah, blah, blah, the typical spiel that you you’ll see on TV if you can’t sleep, yeah, you know, insomnia cure, right? Yeah. And so so I heard him talking about that. I went out and I got his book. And I read three chapters of it. I was only 16 years old, mind you, and I put it down. My mom picked it up and read the rest and got really interested in the topic. Two years later, I was about to graduate from high school. I was now 18 years old. And my mom says, you know, Jason, you got me into this real estate stuff. I’ve been going to seminars, reading more books about it, and there’s one this weekend. By Disneyland here in Anaheim, California, why don’t you go and so I rounded up nine of my buddies from high school and I, I got them all to go to the, the seminar with me, you know, because you can’t do anything alone at that age, right? And so we all show up on Friday evening, and the first speaker is talking about something called points. And I didn’t know what points were. And you know, they’re prepaid interest on a loan, I now know that. And one point is 1% of the loan amount, right? And so, I remember I discovered Earl Nightingale Denis waitley, Zig Ziglar. And Jim Rohn, about a year before that, when I was 17 totally changed my life. I remember Earl Nightingale saying, you know that whenever you want to learn something new, you should just Humble yourself. And he gave the example of real estate Actually, he said, if you want to get rich in real estate, learn the business first. So by the end of this seminar, I was just hooked. I was totally fascinated. I I stayed all through the weekend. through Sunday afternoon, I saw all the speakers. All of my friends had gone off to the beach and boogie boarding and surfing and working on their tan. But I stayed inside every speaker and first thing Monday, I went and I looked for Where can I enroll in real estate school. And by the time I was 19, I was in my first year of college now, I got my real estate license in hand. And it was just a couple weeks before my 20th birthday, I went to work at a cheesy century 21 office in Anaheim, California. And I started just selling real estate part time while I was going to college. And what do you know, I actually worked on like most people in the real estate business, or at least at the time, it’s, it’s matured, admittedly, that industry has gotten, you know, much more professional over the years, but this was a long time ago. And so, you know, I sold like five properties my first full month in the business and I couldn’t believe it. I had only earned minimum wage. Before that. I started working at age 14. The minute I could work and get a work permit And I couldn’t believe it. And one of my clients, a guy named Jim wall, he was buying investment properties from me. And I was, you know, driving them around in my little Volkswagen Jetta. And I was working with a lot of investors because that was really my interest. It was the investing side of the business. And he comes to me about six months into my career. I’m now 20 years old, and he says, you know, Jason, one of these properties I bought from you, I really don’t like it very much. Why don’t you take the listing and sell it for me find a buyer, I’ll buy another property with the proceeds. And I said, You know what, Jim, I don’t want to sell it for you. I want to buy it from you. And I actually bought this little property this little one bedroom condo on Coventry lane in Huntington Beach, California, from Jim and that was my first rental property when I was 20 years old. I had what most people would consider a bad experience. My very first tenant stopped paying me rent after a couple of months I had to evict them from the property, and they left the property in bad condition. I ended up selling it to another investor who was doing a 1031 tax deferred exchange. And I actually did okay on it. And then I started buying properties. And I was selling real estate and I was going to college, I was doing all this stuff at the same time. You know, I had just made a bunch of money, both in the real estate business as an agent, serving clients, and also as an investor investing for my own account. And I just, I just fell in love with it. I think it’s the most historically proven asset class in the entire world. Unless you’re an insider. Now, you can make a ton of money on Wall Street if you’re an insider, but you know, for the rest of us, it’s a little harder. And so so that’s the story of how I got started and, you know, glad to share anything or answer any questions you have.

Brian Bain 22:44
Yeah. Well, I mean, I lots of questions. I mean, I fall in the camp of probably like many of our listeners, where, you know, I’ve attended some seminars, and I’ve read some stuff on real estate rental properties. I’ve actually been very close to purchasing one before but I haven’t actually followed through with it. There’s a Obviously a lot of different reasons for that. And some of them are good, maybe some of them not. But I think a lot of my listeners probably fall in that category as well. And real estate unlike some other investments, whether it be equities or otherwise, there is that there’s that kind of fear risk factor that comes into the game. And you mentioned earlier, there’s lots of unknowns that can come into real estate or it’s how you mentioned how it’s important to learn the business first. I would like I would love for you to address that just people on the fence. Love the idea, but just don’t know what to do next and fearful of taking that first step.

Jason Hartman 23:34
Yeah, yeah, absolutely. So first of all, one of the beauties of income property and we really should refer to it properly is income property versus real estate because real estate could mean anything, but with income property, you know, income producing rental property. It is a multi dimensional asset class. So when you look at stocks, if they’re non dividend paying, you have one source of potential profit, capital gains only. If you look at precious metals, capital gains only. If you look at raw land capital gains only, but income producing real estate income property is a multi dimensional asset class. So you have capital gains opportunity through appreciation, you have tax benefits, because it’s the most tax favored asset class in America. Taxes are the single largest expense in any of our lives. So that’s, that’s huge, just on the tax angle alone. And then of course, you have income from the property, and you have leverage, and you have something that I want to share with your listeners, which is a concept probably nobody has really thought of, and I have a little trademark term that goes with it. I call it inflation induced debt destruction. And I’ll share a real live example that happened to 10s of millions of people over the past couple decades, and it’s this hidden wealth creator in the real estate Income property world. And it’s it’s, you know, you can use what I call the double inflation arbitrage to really, really ramp up your profits. So happy to take it wherever you want. But, you know, when you when you hear about these bad experiences in real estate, look at if you own stocks and lose money, you don’t really feel the bumps in the road. Even if you make a modest return from those stocks. There may be a whole bunch of bumps in the road that you never heard about. You never noticed and you never dealt with, for example, you have so many layers, so many layers where you have to peel back this onion, you’ve got your financial advisor, hopefully you’ve got a good one. And hopefully, you know, they’re not a crook, right? So you get past them, and then they put you into maybe some funds, or maybe they put you into some different companies in which you own stock. And you’re subject to all the graft and corruption of the CEO and the board of directors of the company or or maybe the the middlemen in between the fund managers whatever right and so saving All of that goes well, and everybody’s honest and upstanding. And, you know, they, they comply with gap principles and proper corporate governance and all that good stuff. Okay? So say you get past all of that, well, you know, the bumps, you don’t feel that you do feel in real estate because you’re a direct investor in the property, right? It’s yours, you’re in control of it. So you feel the bumps, if the tenant doesn’t pay you, if there’s a repair, if there’s a disaster of some sort, you you’re gonna feel that and know about it. Whereas if you invest in the company and own stock in them, you know, you don’t know if the CEO is getting sued for sexual harassment, and that could really screw up the company. You don’t know if they’re on the take. You don’t know if you know they’ve infringed on somebody’s patent, and they’re about to get sued the way Samsung did and lost several years ago to Apple, you know, they’re just you don’t know about their competitive landscape very well. You can’t you’re not there. Okay. You know, it’s just not possible to really know this stuff with with I mean, you can be a great very aware of Well read and well, well educated investor, but you can’t know everything because it’s not your company, you know. So those are some of the differences.

Brian Bain 27:07
Yeah, no, and that’s helpful. And, of course, one of the things that I think people probably think it’s good about that is, even if you may not know, those things are happening. You’re the worst case scenario and a stock investment is that you lose your entire investment, which would be very bad, obviously, and rare. But that’s, but that’s it. But obviously, with real estate, you know, that you’ve got the debt you’re responsible for. There’s potential legal ramifications, because you are the frontline person. And then, you know, as the as you’ve heard, I’m sure a million times the three tiers of taxes toilets and, and tenants, you know, so I am Yeah, I love to hear. Yeah, just how you address those things.

Jason Hartman 27:43
Yeah, absolutely. I’d be glad to address those. So first of all, the vast majority of income property loans are non recourse loans. So you’re not going to you can walk away. That’s the implicit what I call nuclear option that over 10 million people did during the Great recession. In fact, a lot of them walked away and got paid to walk away. countrywide Bank of America was literally paying people to do short sales unsolicited on their properties they would send out, they probably sent millions of letters that said, we will pay you to do a cooperative short sale anywhere between 6000 and $30,000. You know, you will let you out of the loan, you’re off the hook, just sell the property. And of course, they did that because of, you know, all of the dynamics to which we’re not privy, but it’s probably tarp. And, and, you know, the various Omnibus bailouts, the bank’s got and all of this kind of stuff. And so, you know, that usually very rarely is there actually a recourse loan on a on a on a piece of housing.

Brian Bain 28:51
And so just to be clear, when you say, when you say non recourse that means, so if I’m if I own an income property,

Jason Hartman 28:58
You can walk in the lender accounts. sue you for the difference.

Brian Bain 29:01
Right? And so basically, they would just, they would sell the property to cover the loan on some and

Jason Hartman 29:05
Well, they probably not cover the loan, and you know, they lose money, but it wouldn’t be your problem, you would lose your equity, your down payment. So if you put 10% down on that property, you could lose your 10%. And you could walk in as long as it’s a non recourse loan. That’s it.

Brian Bain 29:21
But that would impact your credit, I’m assuming, right?

Jason Hartman 29:23
It would impact your credit. Right? Okay. Yes. But then, you know, there are a plethora of places out there that can repair your credit. Sure. So, and some of them are very hokey and dishonest. Yeah. So be careful with everything right. But But you know, some are reputable and it can be done.

Brian Bain 29:38
Okay. Of course, obviously, it’s an extreme situation.

Jason Hartman 29:41
Yeah, absolutely. You know, hopefully you’re never gonna face that. But certainly, it’s an option. Okay. Yeah. So what where would you like me to go? Do you want me to talk to you about inflation and do step destruction?

Brian Bain 29:53
Yeah, go. Yeah, I mean, I was gonna get there. Eventually. We might as well do it now.

Jason Hartman 29:56
Yeah. And I’d be glad for your listeners. If you’d like to supply you with some of these written materials, some of the actual PowerPoint slides I’m referring to here, so that you could put them on your website and they could, they could actually download them and look at them. If you, if you’d like me to do that, I’d be happy to, because I’m going to be talking about quite a few numbers. Okay.

Jason Hartman 30:15
But let me just set this up first, and let’s look at the more macro economic environment. Okay. I your listeners are sophisticated educated people, and they’re certainly aware as Are you as to the problem with our spendthrift government. Okay, we are in the hole in a massive way. Okay. And so, with in knowing that, I’ve identified six basic ways the government can get out of its debt and deficit problem, okay. I had Laurence Kotlikoff on my podcast a couple of times. And you know, he’s the famous economist to who has really probably studied this subject more than any by anybody. And that is the unfair Funded mandates and the unfunded entitlements that are hitting us over the next 1015 and 20 years. And some would call this conservatively conservatively, the 60 trillion and that’s with a T trillion not billion trillion. Okay? The $60 trillion time bomb. Laurence Kotlikoff says it’s about a 200 and $20 trillion time bomb,

Brian Bain 31:25
And this would be referring to, like Social Security, pensions and things like that. They probably don’t have funding.

Jason Hartman 31:31
Yeah, absolutely. All the promises our government has made that it simply cannot keep. Okay. So there are really only six ways out of the mess that I’ve identified that I know of. Number one is to default to simply say to everybody look, sorry, you know, everybody before me, it’s all george bush’s fault, whatever. Yeah. That’s what they always that’s, that’s Obama’s favorite line. not to get too political there. But, you know, all my predecessors, they overspend and we can’t keep The promise so sorry, we just can’t give you Social Security tough. We can’t give you a Medicare, we can’t give you Obamacare. We can’t give you disability. We can’t, you know, we can’t maintain the roads, we can’t pay for national defense, whatever. Right? So that’s one very politically unpopular, very unlikely option. Fortunately, the United States has the reserve currency of the world, at least for now. So we can inflate our way out of the mess very nicely. Other other countries don’t have this luxury that we do. The second option is to raise taxes. And there it’s simply not possible to raise taxes enough if you literally taxed everybody at 100% of their income. If you said, you know, all of your income, give it to Uncle Sam, there wouldn’t be enough to pay for this problem. The problem is expanded it’s it’s too big. taxes will not do it. And of course, we all know as as Reagan so aptly proved that when you raise taxes, you actually suppress revenue and you suppress economic activity.

Brian Bain 33:00
Yeah, you’re punishing earning potential,

Jason Hartman 33:02
Right. So it’s a terrible idea of raising taxes an absolutely terrible idea. Okay, so that’s number two. Number three is we can have a yard sale, we can sell the port’s to Dubai, we can sell military equipment to Libya to Taiwan, you know, and these are all things we’ve either considered or we’ve done, you know, the Bureau of Land Management sounds like

Brian Bain 33:19
You’ve seen that Greece right now, for example. Yeah,

Jason Hartman 33:21
yeah. Absolutely. Greece’s, you know, thinking about maybe they’ve actually done it now. selling off islands. Spain is a disaster. Portugal is a disaster. The world is a disaster, basically. Right. And so, at this dance of really ugly girls, the US happens to be the prettiest out of the ugly girls. Okay. Right, because it’s got some special characteristics that other countries don’t enjoy. So number four option after having a yard sale is just use the most powerful military force the world has ever known the US military to basically steal from other countries steal their resources. Certainly, you know, we were accused of doing this in Iraq. I don’t know that it’s true. But, you know, it is an option. A very famous person that is usually revered in history was just a thief with an army. His name was Napoleon. Okay. I mean, you know, he was he was a, he was a thief, okay, that had a military and he, you know, he’s a hero, right? It’s an odd, odd view of the world. On the positive side, we could have a great technological innovation, you know, in the areas of maybe energy, biotech, nanotechnology. You know, there’s all kinds of exciting things happening. I mean, I always say on my show, it’s an amazing time to be alive. And it really is, if the US is at the center of one of these innovations, or many of them, that could dig us out of the hole pretty far. But the most likely thing the sixth option is to simply inflate our way out of the problem. And that is basically debasing the currency and paying all those promises back in cheaper dollars, as as the value of the dollar inflate it away. This is a fantastic business plan for governments. It’s a fantastic business plan for investors. And what I’m proposing is that we as investors align our interest with governments and central banks, the most powerful forces in the world, because, you know, they may be a total scam, they may be totally corrupt, and I agree that they are, but we’re not going to change it. So we better get on their side of the table because they are so powerful. Okay, so to understand and to get excited about monetary and fiscal policy, we need to understand inflation and what it really is okay. And I admit that inflation is pretty tame at the moment. But if you take out a 30 year mortgage, that’s at a fixed artificially low interest rate today, and you have that mortgage against commodities, that where the debt is outsourced to somebody called a tenant. I mean, look, I don’t like debt if I have to pay it myself. But if I can outsource my debt to a tenant, this is a beautiful thing. And that’s why it’s such a great asset class, right. So to understand inflation, we need to distinguish between real and nominal real is the real value of something nominal just means a name only. And, and we need to distinguish between price and value, we need to understand that inflation is this insidious, hidden tax that destroys our purchasing power and our standard of living. And we need to notice that inflation destroys the value of our savings, our stocks, our bonds, and thankfully, the value of our debt. This is the beauty of it. debt is my favorite four letter word when I don’t pay myself and when it’s against what I call packaged commodities. See, I’m a commodities investor, I invest in lumber, copper wire, petroleum products, labor, energy, concrete, glass and steel. And they’re always assembled in the form of a house or an apartment building. That’s my favorite investment. And I get 30 year artificially low fixed rate debt against those assets. So I’ve got the commodity hedge against inflation, and the debt being debased against inflation, while the tenant is actually paying the debt and I’m not. I call this the double inflation arbitrage. Now, inflation is the most powerful method of wealth redistribution ever known to man. It’s far more powerful than taxes. You may remember a long time ago a guy by the name of joe the plumber, right, who asked candidate Obama Are you going to redistribute my wealth? Well, I had joe the plumber on my podcast, okay, and And you know, he got sort of has his 15 minutes of fame from that line. But inflation is a much better way to redistribute wealth than taxation. because not many people notice that they all notice taxes immediately, but inflation is the slow burn. Okay. And inflation redistributes wealth from lenders to borrowers. Because borrowers pay their debts back and cheaper dollars, lenders loan them out in current dollars. So you you take advantage of this huge time value of money, opportunity, and it also redistributes wealth from old people to young people. Now, why does it do that you might be thinking, well, old people generally have assets in the forms of savings stocks and bonds. Well, young people generally have debt. So their debt is paid off through inflation and old people suffer Because the value of their assets is debased by inflation, see, because it’s all denominated in dollars or whatever currency is being inflated.

Brian Bain 39:08
Yeah. So essentially, I mean, not to make it too obvious, but just to make sure it’s clear for the audience and stuff is that if you borrow $100,000, for a house in 2015, or 16 now, and each year, there’s inflation you’re paying, you’re still paying back the same fixed amount of hundred thousand dollars, but you’re paying it back with cheaper and cheaper dollars moving forward.

Jason Hartman 39:29
Absolutely. That’s beautiful. You explained it perfectly. And lest we think unless your listeners think that this is some abstract theory, let me put into into into real terms here, okay. And I’m going to share with you an example. Now, there’s quite a few numbers here. So just pay attention. Okay, I’ll make it easy to follow. And I’ll be glad to give you a copy of this if you want to put it on your website for your listeners. But basically, this happened to 10s of millions of people what I’m about to share, okay. So here’s the example. In 1972, one year after we went off the gold standard, okay, the median single family home was priced at 18. I’m going to round off to make this fast. Okay? About $18,000. Okay? If you put 20% down on this property and you lived in it, this is not an income property. This is just a home you lived in. Now, if it was an income property, it would be dramatically better than this example. But it’s good enough without getting income. Okay? So so if you put 20% down, you would get alone a mortgage for about $14,000. The interest rate on a 30 year fixed rate mortgage in the middle of 1972 was 7.37%. Okay, so that’s what you start with in 1972 $1 was worth $1. But we had some inflation. We had the Jimmy Carter era, which was a disaster. We had paul volcker, the only Fed chair, probably ever willing to make the the economy take its tough medicine, which was tough, but he broke the back of inflation by doing that by raising rates and, you know, curtailing the money supply, which every other Fed chair has done the complete opposite that, you know, their idea of putting out a fire is to throw gasoline on it if you’re, if you’re, you know, Ben Bernanke, Janet Yellen, or Alan Greenspan. Okay, so let’s just fast forward 12 years now to a year that a famous book was written 1984. Okay, the Orwellian era, right? So in 1984, that 19 $72 is now worth only 40 cents. And this is by official numbers. In reality, inflation is always higher than the official number the government gives us, but let’s just take the official number to be conservative. The example is actually much better than this in real inflation terms. So now that 19 $72 just in 12 short years has lost 60 cents of its value 60% has been the based or paid off by inflation, right? And every month for the last 12 years owning this house, you’ve been making mortgage payments of $101 one on one per month. But as the years went by that payment felt cheaper and cheaper to you. Because by 1984 the real value of that payment even though you were still writing a check for one on one per month was only $41 because of inflation paying down the the loan, Okay, now let’s fast forward to the very end of it. 30 year mortgage, this happened to 10s of millions of people. It’s not a theory, it actually happened. But most people thought they they got wealthy by owning their real estate because it went up in value. But what they didn’t usually realize is the day went down in value. Okay, so they got this double inflation arbitrage as I call it. Now, in 2001, when you’re making the last payment on that mortgage, the value of the 19 $72 now only 24 cents, the payment when you’re writing that last check for $101 the the feel value, the real value of it, what it feels like is only $24. You know, it’s basically like buying lunch. Okay, and, and that’s the last payment. So let me summarize this. The mortgage, the money we borrowed was only $14,000. In nominal dollars, we repaid $36,000. But after inflation, attacked those dollars and the base them and paid them down to the benefit of the owner of the property and the holder of the mortgage, the debt being a huge asset, not a liability as most people think the real dollars that we repaid was just over $16,000. Now it gets better. After tax benefits, the real inflation and tax adjusted dollars was only $12,000. But wait, you say Didn’t we borrow 14,000 and we only in real dollars paid back in real terms? 12,000 Yes, we thought we were paying 7.37% interest. But after inflation, our effective rate was only 1.06%. And after tax benefits, it was negative 1.16%. We got paid to borrow the money.

Jason Hartman 44:41
We got paid and I didn’t even mention that we lived there for three decades for free. We got free rent for 30 years and got paid.

Brian Bain 44:52
How does the free rent come in? That’s I thought your income property.

Jason Hartman 44:55
well because it no this is not an income property. If this were an income from would be dramatically better. Because see, we were making these payments ourselves, if we could outsource the debt to a tenant and have them hopefully pay us a little extra every month called positive cash flow, this example would be like, infinitesimally better. Okay? But if I if I even did that example, if I did the math on it, no one would believe me,

Brian Bain 45:22
It’ll be like, like lottery numbers better.

Jason Hartman 45:24
Yeah, it’d be insane. Okay, it’d be like, you know, your return on investment was like 9,082% or something.

Brian Bain 45:30
Okay, so I guess you’re saying they live there for free because they had to pay back less than they borrowed? Is that what it came down to?

Jason Hartman 45:37
In real dollars? Yes. And, and, and just so you know, you know, there were there was some high inflation in there for a few years under Carter. But overall, the average inflation rate over the three decades was only 5.1%. It was modest. I mean, it wasn’t you know, if the if this deal were in Zimbabwe or Spain or Mexico or Portugal or Brazil Or Argentina, or, you know, any of these countries that experienced very, very severe inflation, the Weimar Republic, you know, Germany, for God’s sake, I mean, the returns would be insane.

Brian Bain 46:12
Going by official numbers, even in a relatively lower inflation environment like we have today, the principle still holds, it might not be quite as compelling. But the principle is still there unless we fall into deflation, which is it’s not as dramatic as any of the central bank. So I think we’re probably on a safe end on that front. But no, that’s compelling. And I think that’s, it’s, it’s helpful to hear perspectives like that, because, again, as you mentioned, real estate, it does involve more hands on, especially at maybe an excuse me income properties, especially at an early, early level, because if you’re maybe more deeper into income properties, you can, you know, hire management companies and have a little more hands off, I guess, in the process, but realizing that there are those benefits like that And of course, you know, in the back of everyone’s mind, there’s gonna be that one story you heard over here about the tenant. Yeah. And you know, it was just this disastrous process. And then there’s there’s gonna be one story over here.

Jason Hartman 47:13
Yeah, yeah, I had to evict somebody, you know? Yeah.

Brian Bain 47:16
Yeah. Pipes bursting.

Jason Hartman 47:19
A repair issue or something. Yeah, sure. No, I know you’re out there. Hey, listen, I have them. It’s not perfect. I’m I am by no means saying this is perfect. It has problems. But look, I’ll tell you. You never hear a story from any of your friends. A cocktail party conversation of Oh, yeah, I got a bunch of properties and my tenants pay rent every month. Perfectly on time. Yep. That is what happens most of the time.

Brian Bain 47:42
And I’m extremely wealthy because of it. Yeah, no one says that.

Jason Hartman 47:44
Yeah. Right. That’s, that’s what happens the vast majority of the time you only hear the exception to that. Okay. You only hear the negative story.

Brian Bain 47:52
And that’s my point. And that’s my point. Yeah. People, we get scared off by the one or two stories. That very likely may not be indicative of reality?

Jason Hartman 48:00
Absolutely, absolutely. So so you know, don’t let them scare you. And, you know, I just want to compliment you for having me on your show. Because, you know, this is not your thing. You’re interested and your audience is interested in investing in stocks. And you know, I’m the outlier here. So, you know, it really shows that you’re a journalist by having me on and showing another viewpoint. So I appreciate that, that your listeners should appreciate it, too.

Brian Bain 48:22
Yeah. You’re very kind to say that, Jason. And yeah, I mean, our goal, ultimately, is to become better investors period. I always love saying that every dollar we spend and every minute we spend is an investment in something and you want to make the best possible investments we can and if that’s in equities, great and if it’s not, then we want to go there too. And I think, obviously, you said before we started the interview, you could talk for three days on this topic, and I don’t doubt that because I would like to keep picking your brain on the topic.

Jason Hartman 48:48
I love this stuff. Yeah, I just love I absolutely love it. But But yeah, it’s great. I’d be glad to come back on. You know, there’s another whole principle that’s kind of a big a big chunk. I call it the Hartman risk evaluation. Took me 19 years to discover this, of what really can dramatically reduce risk and investment. You know, it didn’t take another half hour to go through that. But you know, maybe we can do it another time. It’s pretty interesting. But, you know, I just wanted to get this stuff out, because I think it’d be interesting to your investors and, you know, well, we’ll see where it all goes. It’s quite interesting. And I would say if you’re going to be in the stock market by dividend paying stocks, because, you know, you gotta have income. In fact, I define, I say, in the in my podcast, and in my seminars, I say anything without income, does not qualify as an investment. It’s simply a speculation. So they can land that’s real estate, but it’s, it’s a speculation, it’s a gamble. It’s not an investment. In order to have an investment to use that term. You have to have income without income. You know, if you if you buy gold, or silver and you level this, I own all this stuff. too, okay, I own some wall everything pretty much, you know, except I don’t own any stocks anymore, okay, or mutual funds, but I used to own a bunch. If you buy precious metals, you know, they don’t produce any income. That’s a speculative deal. You know, it’s gambling. And so you Listen, I’ve won a lot of times gambling, okay. So I freely admit that, but I’m just saying, The older I get, the more conservative I get. And I just want things I like mailbox money. I just like getting income every month. I like by tenants paying off my loans.

Brian Bain 50:30
No, I mean, that’s a good word. I think, the more I grow as an investor with experience and otherwise, you know, it’s the one of those age old investing truisms that usually usually the more boring the investment, the better the investment is. So, yeah, you know, and you think it’s so easy to get in that mindset of, especially when you’re looking at something that you hope will have quick appreciation or significant appreciation that’s exciting, but it’s almost it’s very rare than an exciting investment. Doesn’t have usually an equal amount of risk involved too. And so that

Jason Hartman 51:04
Yeah, they are the more simple and boring I agree. Yeah.

Brian Bain 51:07
Sure. Well, and over time.

Jason Hartman 51:10
This this what you’re talking about is so true, because there is nothing sexy about my investments except the returns. You know, it’s a difference. It’s a difference between having a wife and a mistress.

Jason Hartman 51:24
One is exciting, but really scary. And the other is dependable.

Brian Bain 51:29
Yeah, and if, and if you measure if you get caught up measuring things in months versus measuring in years and decades, that’s the difference. It’s when you can think into years and decades. That is where you’re positioning yourself for great success in my mind, and that’s, that’s definitely the game of real estate in the local real estate mentor that I’ve been working with. And you know, he’s talked about, you know, everyone wants to say, Well, I’m not quite ready for real estate. I’m not quite ready to do this. But the thing is, it’s the it’s one of those where you you don’t want to wait to buy you want to buy and then wait because you Let that tenant pay off that mortgage. And then it’s like you said, mailbox money and all you’re dealing with is, you know, taxes or whatever else. But Jason again, I want to respect your time. Like I said, I could pepper you with questions for the rest of the day. And I know you could, you could offer great stuff that entire time. But you’ve got a lot on your plate right now. We want to wish you the best with your upcoming conference. And we look forward to hopefully connecting with you again sometime and also getting some of those PowerPoints you mentioned to give their audience that’d be a real help.

Jason Hartman 52:30
And yeah, I’ll email those over to you. So you can put them on your website. And if they have questions for me, my website is Jason hartman.com. It’s just my name Jason Hartman, h AR t ma n COMM And then of course, podcast is on iTunes and all the usual places.

Brian Bain 52:45
Yeah, and we’ll be sure to link to all those things from our website. Make sure our guests and listeners can find you as well. And hey, Jason, thanks for coming on the show and we wish you all the best.

Jason Hartman 52:54
Hey, thanks for having me and happy investing to you and your listeners.

Announcer 52:58
I’ve never really thought of Jason subversive, but I just found out that’s what Wall Street considers him to be.

Announcer 53:05
Really now. How is that possible at all?

Brian Bain 53:07
Simple. Wall Street believes that real estate investors are dangerous to their schemes? Because the dirty truth about income property is that it actually works in real life.

Announcer 53:18
I know. I mean, how many people do you know not including insiders who created wealth with stocks, bonds, and mutual funds? Those options are for people who only want to pretend they’re getting ahead.

Announcer 53:30
Stocks and other non direct traded assets are losing game for most people. The typical scenario is you make a little you lose a little and spin your wheels for decades.

Announcer 53:41
That’s because the corporate crooks running the stock and bond investing game will always see to it that they win. This means unless you’re one of them, you will not win.

Announcer 53:51
And unluckily for wall street. Jason has a unique ability to make the everyday person understand investing the way it should be. He shows them a world where anything less than a 26% annual return is disappointing.

Announcer 54:06
Yep. And that’s why Jason offers a one book set on creating wealth that comes with 20 digital download audios. He shows us how we can be excited about these scary times and exploit the incredible opportunities this present economy has afforded us.

Announcer 54:20
We can pick local markets, untouched by the economic downturn, exploit packaged commodities investing and achieve exceptional returns safely and securely.

Announcer 54:31
I like how he teaches you how to protect the equity in your home before it disappears and how to outsource your debt obligations to the government.

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And this set of advanced strategies for wealth creation is being offered for only $197

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To get your creating wealth encyclopedia book one complete with over 20 hours of audio, go to Jason hartman.com forward slash store.

Announcer 54:54
If you want to be able to sit back and collect checks every month, just likea banker, Jason’s creating wealth encyclopedia series is for you.

This show is produced by the Hartman media company All rights reserved for distribution or publication rights and media interviews, please visit www dot Hartman media.com or email media at Hartman media.com. Nothing on this show should be considered specific personal or professional advice. Please consult an appropriate tax legal real estate or business professional for individualized advice. opinions of guests are their own and the host is acting on behalf of Platinum properties, investor network, Inc. exclusively.


Sara joins Jason Hartman to talk about the low-interest rates and how it’s changing the dynamic of the market place. They discuss clients building their portfolios and buying properties with cash and delayed financing to seize the interest rates. They also encourage property holders to engage with their property managers to set expectations and ensure current needs are met.

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 0:12
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 1:03
Welcome listeners from 164 countries worldwide. This is your host, Jason Hartman, thank you so much for joining me today. I’ve got one of our great investment counselors here. You’ve heard her on the show before. And that is Sarah, and we thought we would do a little gossiping. No, not really. But maybe a little bit. Oh, I don’t know. Sarah, how are you?

Sara 1:27
Good. Good. Thanks for having me. Again.

Jason Hartman 1:29
It’s good to have you back on. I always have to twist your arm to get you on the show. I tell you, you just, you’re just too busy. You’re a busy person. And there have been a lot of people buying properties lately. And that’s what I meant by gossip. I thought we’d gossip a little bit about them. And you know, I got the greatest note today. I love getting notes like this from one of our clients from a couple of years ago. And this is Oscar and Christine will review the whole note but he said hello Jason. I hope all is going swanky with you. See he knows me. He knows my stuff. Word. I’m not sure if you remember me and my wife, we purchased a bunch of properties from your network a few years back, happy to report that all as well. And I actually quit my job to do this full time. That’s an Oscar. That’s awesome. That is so awesome. We love to get messages like that. And we actually get them with some degree of frequency, but we don’t always mentioned them on the show. It’s just awesome to hear that you and Christine are you’re basically out of the rat race, you’re financially free due to the properties you purchased from us and we just love to hear that kind of stuff. And congratulations, you are you’re on your way or well maybe you’re just already living the good life the sweet life. Congratulations to you. That’s awesome. Awesome, awesome. And Sarah you got another one like that to share? Right?

Sara 2:50
Yeah, well, I kind of wanted to wait because they haven’t finished closing all their deals but they have them under contracts. I thought it was definitely worth a mention. Stacy and Andy from Southern Cal fornia and they are so young. I don’t know exactly how old they are. But I think they’re like early 30s they are almost wrapping up 20 loans between the two of them. Wow. So congratulations on your guys’s progress. I’m so excited for you. And we got a great email from them. So that’s, that’s exciting. I mean, they are just so young and they’re go getters, and they don’t mess around. I mean, they’re tough on their property managers for sure. They definitely know how to manage their managers.

Jason Hartman 3:28
Yeah, no question about it. That’s, that’s fantastic. Folks, this is just a matter of doing it. That’s really all it is. So if you are sitting on the sidelines, thinking and hearing these stories about people investing in real estate and creating financial freedom, it’s nothing more than just doing it. It’s really not that complicated. Many of you have a couple of properties, but you’re not really going big. You know, you’ve got some money in the stock market. The modern version of organized crime, hey, you’ve got, you’ve got some other things going on. Maybe you got a bunch of equity trapped in the house in which you live. And you should free that equity up and make it do something for you remember, there is no such thing as return on equity. I know that is a metric that they use out there. But I’ve proven hopefully conclusively, and you’ve heard me talk about it on prior episodes, that return on equity is a myth. So if you have equity in your home, and here’s the way you know that, look, it’s tax time, right? A lot of you, you’ve probably already done your taxes. Many of you are like me, and you’re filing extensions, which I firmly believe in filing extensions. Many say that that reduces your audit risk, by the way. But the last time I’ve been audited twice in my life, I sent a tangent. I’ve been audited twice in my life. And the last time the IRS lost and they ended up paying A whole bunch of money. So I just have a feeling my friends at the IRS aren’t going to be back anytime soon. But Sara, since you’re here, let’s just talk about audits for a moment. Because Do you remember jack from the IRS? Who back in 2010 basically was like an employee. He was in our office every day. Remember that guy?

Sara 5:18
Yeah. I remember specifically going in the elevator with him every day as we would go to Starbucks, but he would never let us buy him a Starbucks.

Jason Hartman 5:29
Yeah, well, that that’s illegal. I think I did actually buy him a Starbucks once. But it didn’t help me in the audit because I last as far as jack and I went we did we did sit and have coffee a couple of times over at Starbucks and whenever we would go to lunch, we’d always make sure to invite him but he wouldn’t exactly never

Sara 5:47
He would never join us. Yeah.

Jason Hartman 5:48
And here’s it but I lost the audit as far as jack goes, I want on appeal. Okay, so my CPA will if the time Who’s your CPA still. He fought it and I One so who says you can’t fight City Hall, the IRS ended up paying me a bunch of money. That was a big win. But it’s funny, jack, it just shows you how inefficient the government is right? And how these employees, the vast majority of them are just taken advantage of the government gravy train, because I swear to you, jack wood, wood, he’d come to work. And I pretty much knew that his whole day was dedicated to my audit for quite a few weeks that he was in our office. And he would come in and he’d probably get there at about 930 10am and we’d usually get out and maybe leave for lunch at about one. And that was Jack’s day he told me he said yeah, I’m going to pick up my daughter or whatever he would say, or go and pick up my kids at school or something like that and and then just go home. And he just did not seem like the ambitious type of guy working in the private sector that would be on his computer after he went home, doing work. You know, he would. It sounds like pretty much his day was about four hours long. So that was my impression but

Sara 7:08
So wait, I didn’t realize that you lost that audit.

Jason Hartman 7:13
Well I lost it. But

Sara 7:15
Does he know you eventually won?

Jason Hartman 7:18
Oh, I’m sure he does I’m sure he does you know I could probably call him up and rub his nose in it but I’m not gonna that’s not smart. You don’t know that. You don’t do that with a government okay. But yeah, I lost Well, I mean, I don’t know that I really lost but he assessed fees to my account, and he said you owe the government right. And then on appeal, I and I may be technically wrong about what actually happened here but I think my CPA appealed it and then went to Tax Court, I guess in one and it was it was his his rule was overturned and the IRS ended up paying me a few hundred thousand dollars. It was very profitable. I was so glad they audited me. And this is funny that the thing is, that was during the Great Recession, okay. And I was really depressed I felt like he here with all the other problems business wasn’t going so well back then. And things were scary if you if you remember folks back to the news and all the stuff in the media back then things look pretty bleak, okay. And then here I get this call or a letter or both, that I’m being audited and I thought, oh my god, really. And I was I was pretty bummed out. But it turns out, it was a huge win. I’m really grateful. I’m very glad that it happened because it was good. And you know, the IRS actually showed me some mistakes I made that were to my benefit on my return. And so it was it was a great deal. Very glad they came by

Sara 9:00
I don’t know if I ever told you but I got audited right around that time too. And I know how you feel about, like the economy being down. And I remember we were working so hard just to continue business and help people. You know, there were there were some clients that were having some challenges and we were just kind of working through it. And I remember the feeling like getting audited in one of my lowest income, years thinking man, like, What a waste of time. That was just such a small audit. I think they only it was a partial audit. And I just remember thinking here I am like working my butt off and I’m getting audited is here to add insult to injury, right,

Jason Hartman 9:39
Right. But I will remind you there is this great little old book by the late writer Robert Schuller Okay, who was the founder of the crystal Cathedral in Garden Grove, California. And it’s got an awesome title. The title of the book is tough times never last, but tough people do and right around the corner from any bad thing that happens in our lives, it always seems like something good either happens next or something good comes out of it. And we’ve all been through tremendous challenges in our life. You know, if we’re older than 25 years old, we’ve usually been hit with some pretty tough challenges. I remember when I was in my 20s and thinking I was bulletproof and you just a little longer and crap is going to happen to you, okay? And it may be something you put into motion. It may just be from the outside world and outside forces, but you are going to face challenges. I promise. People used to say that I remember being in church hearing about stuff like that. I thought, yeah, life is great. Everything always goes perfectly. No it doesn’t. and stuff will happen. But if you just give it a little time, things turn around. They always Do and, and always look for the silver lining in the cloud. And always remember this one saying that I used to say, when I was training real estate agents many years ago, and through various challenges and tough economic times, and so forth over the years, I would say the key to success in business is to stay in business long enough for something good to happen. stay in business long enough for something good to happen. And the same is true with real estate investors. It is a game of staying power. And so many times investors get discouraged because oh, I’ve got a vacancy. I’ve got an eviction, I got a tenant who beat up my property and now I’ve got a bunch of expenses to repair it. But But undoubtably invariably if they just don’t give up. If they persist, they will get through those bad times. And suddenly, before they know it, just just a little time goes by and as Everything has worked out, and they are loving it. And I’ll give you an example. Our friend Drew, who is your client, Sarah, and drew has been on the podcast, things started out pretty rosy for him. And he had a tough year a couple of years ago with he had a pretty decent sized portfolio. I think he was up to about nine properties. Memphis, Indianapolis where his markets and one year he had a tough year and he was complaining like crazy. This was about two years ago, I think, several repairs and expenses. And he kind of was thinking this is really unfair. And I said drew and you remember you were on this call with me. I said, sell one of your properties. You’ve got a bunch of appreciation in there, sell just one of them to pay you back for all the problems you had and he wouldn’t do it. He didn’t listen to me. He wouldn’t sell one and you know me I’ve you hardly ever say sell something. Okay. And what I mean by that is liquidate, I would say maybe you sell something to do a 1031 tax deferred exchange and reinvest and I I’m in the middle of one of those right now, I’m going to buy two or three houses, with the proceeds from one house, that’s a great deal by cash flow is going to increase dramatically. And that’s not what I mean by selling in this example. I was actually saying liquidate one, take the money out and use it to pay yourself back, and then some extra for the problems you had. So you’ll you’ll shut up and you’ll be happy, right?

Sara 13:24
Yeah. I mean, why not? Give yourself a payday and give yourself something to get excited about and even if you’re going to reinvest that maybe you get rid of one of your headaches and give yourself that payday. I like payday.

Jason Hartman 13:36
All right. Okay. But But he didn’t do it. I mean, I’d rather have you have your payday through the refinance through the refi till you die program that we’ve outlined. And if you’re a new listener, you don’t know what that is. Go to Jason Hartman comm use the search bar in the upper right and type in refi till you die, several podcast and episodes and diagrams on that exact topic. really powerful but He didn’t listen to me. He didn’t sell. He kept everything. And he just told me a couple of weeks ago, he said, You know, I just I just want to tell you, Jason, I had a really good year last year with my properties. I am doing great. And so it always turns around, folks

Sara 14:18
well, and sometimes you have to make some changes. You know, I remember he made a big property management change, I believe it was in Indianapolis, that that property manager may have helped him turn that portfolio around a bit and get a cash flowing a little bit better.

Jason Hartman 14:31
You know, there’s an old saying that everybody serves a purpose. At the very least they can serve as a bad example. And, and I’d say his former property manager served as a bad example. So, but they, they helped him push him to finally make a change. And I think that was definitely good.

Sara 14:51
Yeah, I want to make sure our clients know it. I know we talked about this all the time, but don’t be afraid to manage your managers. You know, if something doesn’t seem right. They charge you for a repair that just seems way too expensive. Question them on it, look at your statements. Do you know go quick google search or, you know, pick up the phone and call a contractor or you can even go on home depot.com and see how much that part costs. And you can, it’s very

Jason Hartman 15:21
easy to hold them accountable and they’re really, really easy. So definitely do that. And don’t be afraid to self manage your properties either. Sarah, I know you’re not as much of a fan as I am of that. But I think the self management thing’s pretty cool. Now, have you come around to my thinking at all? Are you still firmly a disbeliever and self management or are you somewhere in the middle?

Sara 15:45
I okay, I have something I haven’t told you yet.

Jason Hartman 15:48
Oh, do you use a lot of things you don’t tell me?

Sara 15:51
Lots of things. Lots of lots of things. Okay, so I got a call from I actually talked somebody into self managing, I think It was one of their It was one of their indie properties, actually. And this is Karen. So by the way, congrats to Karen and Rick for putting another property under contract. They’re going on their third in Cincinnati. So they’re making some progress too. But anyways, we were talking the other day and she was kind of complaining about, you know, her property management company. And I said, well just think about self managing that one. It was already leased. She loved the tenant. I think the tenant was complaining about a repair taking too long. And anyways, she came around to it and she called me and she was so excited. You know, she is self managing one of our properties and she loves it. And I turned her on. What’s that website? You told us all about it meet the Masters cozy? Was it cozy,

Jason Hartman 16:45
cozy Co Co. Co yeah.co. co.

Sara 16:48
And she plugged into that for the rent checks and she says everything’s going well. So yeah, I’m coming around to it. I’m not self managing any of mine yet, but some of our clients are they’re doing well?

Jason Hartman 17:01
Yeah, yeah, no, that’s good to hear I really the the biggest challenge in our business is property management. And sometimes the biggest challenge is property managers. Okay? Now, you’re far better off doing it through our network than doing it yourself. Because if you try it yourself, you’re going to have just zero leverage. Alright, but doing it through us, we’ll make that property management experience better for sure. And the property manager experience I want to distinguish those two, but it’s still it’s still the biggest challenge. I think the rest of it’s pretty darn easy. You know, management is where the rubber meets the road. And you really, you got to pay attention to it. There is folks, if if you’re listening for the first time and you’re thinking, well, I thought this whole real estate investing and building a big portfolio, the idea was to have passive income. There is no such thing as passive income. Okay, it doesn’t really exist in any oral I would get casually say, Yes, a real estate portfolio is passive income. But if if you are, if you have any investment out there, including in the bank, just a bank CD, and you’re treating it passively, you’re gonna lose. So really no such thing as a truly passive investment. There are varying degrees of passivity. And this is pretty close. So

Sara 18:22
yeah and and just don’t let your motion your emotions get the best of you. I mean, it’s really easy to get frustrated with somebody especially when you’re mostly dealing with them over email and it’s not very personable all the time. But you know, when you have a management concern, take it seriously. Do what you can to make it as painless as you can, you know, get the best deals on rehabs get your properties leased quickly, but you know, just constant communication with your property manager through those issues if you have them and then this isn’t this isn’t difficult, but just be engaged. You just got to be engaged. Okay. Yeah. Don’t get frustrated too quickly. A lot of times we let our emotions get the best of us. Even so many times somebody will be really upset and then we talk through it. We get the issue resolved. And the week, a week later, they’re like, all excited and got home about it again.

Jason Hartman 19:13
No, yeah. Well, the old saying, don’t sweat the small stuff. And then remember, it’s all small stuff. So yeah. Sarah, should we talk about the property tour? Yeah, coming up. I mean, this is not 100% confirmed, but it’s, it’s, it’s 98% comfortable.

Sara 19:30
And initially, we you know, we were talking about a Memphis tour, and we love Memphis but there’s roles in the inventory sometimes and and that’s kind of what we’re seeing right now is you know, after our meet the Masters a lot of properties sold. Now they’re working a lot is like an understanding.

Jason Hartman 19:48
Yes. Okay. A 10 ton. Yeah, more than a ton because a house just one house I bet weighs more than a ton, but Okay,

Sara 19:55
yeah. What we don’t want to do is we don’t want to put you you know, under contract on our property. That is like still has a ways to go before the renovation is done because all these properties for any new listeners, they come rent ready for your tenant. And so there are there are times when the local market specialists are in their acquisition stage and they’re renovating properties. And we don’t want to just have you sitting around waiting for properties. So we definitely don’t want to take several people to a market to look at, you know, properties that aren’t ready to be sold. So maybe we can do a fall tour. I know a lot of people are interested in Memphis, but we’re getting such great feedback on one of our property managers that I thought doing an Ohio tour would be a good idea. So we’re working on details. I hope it all comes through. We can pencil in some dates and Jason, are we ready to announce some maybe dates?

Jason Hartman 20:50
I think Yeah, we’re looking at early June. So Mark your calendars save the date tentatively, and Just keep that in mind. Okay, we will probably on our next episode or the one after that have this all firmed up for you. So we look forward to seeing you. And this time let’s not do Jq, I didn’t even ask for your vote on this, Sarah, let’s do creating wealth. This one, okay, so we combine it with a seminar, and we split the seminar over two days, so you won’t tire of me too much. And on Saturday afternoon, we do the property tour. We go out to dinner together Saturday evening, we have all the meals together at the event. And that’s just a really great way to casually network and meet other investors. And, again, this isn’t like meet the Masters where we’ve got so many people there and it’s so busy. Property tours are definitely more laid back. We’ll do the seminar over the course of two days, the creating wealth seminar, and then we’ll do the property tour, a Saturday afternoon and early evening and then have dinner that night. So it’s gonna be great. And we’ve had many, many, many, many, many, many I don’t know. Are we up to thousands of people at property tours yet? Probably. We’re over 1000. So far, I’m sure. Oh, yeah, there’s Yeah, maybe maybe a couple thousand people come to our property tours. And they’re great. People love them. So we hope you’ll join us for that. And we’ll announce some early bird pricing, maybe even on the next episode when it gets all firmed up. But I just have to tell you, this brand new hotel that we’ve got, and we’re just waiting for the contract back on it is stunning. It’s spectacular. I love staying at nice places. It makes it makes travel really enjoyable when you stay at swanky places. So that’s, that’s what we’re working on to Syrah. Talk to us a little bit about who’s been buying properties lately.

Sara 22:40
Yeah. Well, you know, a lot of clients a lot of new clients coming through and repeat clients that have been buying with me since 2007, which is awesome to see them, you know, continue to build their portfolios. We recently had Matt in Oregon, do about seven all cash deals. Wow.

Jason Hartman 22:59
Congratulate 77 at a time. Yeah, he

Sara 23:02
did mix it up a little bit. He did Indy, Columbus and Birmingham. And I don’t know, maybe we got to talk them into putting a loan on those properties.

Jason Hartman 23:13
Yeah, well, the nice thing is you can do that delayed financing option, which isn’t categorized the same way of refinances. So if you do it within, I believe six months, you can still get the equivalent of a purchase money loan on refiling those out and they might even appraise for more. So it’s a, that can be a pretty good deal. A lot of investors have used that tactic. It’s a it’s a little known tactic, but just talk to one of our investment counselors about it. They will refer you to a lender who can give you all the good details about that. But yeah, so you may be refinancing or not refinancing, but getting purchase money loans, delayed purchase money financing on those properties, six months from now, and that can be a pretty great deal. So just ask us about it to get more details. When you talk to us, but go ahead Who else? Yeah,

Sara 24:02
we’ve got bill who is a soccer coach, little little guy soccer coach. I think he has girls can’t remember I have a little soccer player. So I remember that

Jason Hartman 24:12
your kids are in all forms of athletics. Every every weekend, Sarah, your Facebook is filled with athletic events.

Sara 24:21
The best I don’t know what I’m gonna do when my kids grow up.

Jason Hartman 24:24
What’s so great about it by the way, see to that to me, that would seem kind of boring, but maybe that’s why I’m not a dad. But I do I do like kids. I think kids are great. I want to be a dad but I don’t want to go sit at those games all the time. But not as much as you do. Why is it your favorite?

Sara 24:39
Well, you see them especially my daughter, my daughter is really competitive. She She plays fastpitch softball, she’s a pitcher, shortstop utility, she can play anything.

Sara 24:49
And she practices she’s got such a good work ethic she practices all week, you know, on her hitting or pitching. And so to see them have a good game and compete to And it’s just it’s just fun and, and then there’s my my son who’s overly confident but doesn’t have the work ethic.

Jason Hartman 25:08
Your son, your son’s ethic so far is the big hat. No cattle ethic, right? self confidence will get you very far in the world even without doing the work a lot of times

Sara 25:18
and he’s so he’s always listening to my calls and you know, my work calls in the car and asking questions, and he’s super into money in real estate. He’s probably going to be your investment counselor in about eight years. So, anyways, yeah, so so build the soccer coach, that was a tangent. And he was actually referred by our friend Gary, and he’s buying some properties in Little Rock and Chicago and, you know, just just getting started in building a portfolio. So congrats to him on his new deals. And wow, I mean, what about what about Brent? Oh, yeah. Brent. Hey,

Jason Hartman 25:53
Brent, you Brent. I love it. I love Brent. Okay, so Brent has been to many of our events. And I am so glad to see him starting to build his portfolio. So that’s awesome.

Sara 26:06
Yeah. And that’s Brandon’s dad who’s one of our venture alliance

Jason Hartman 26:09
Oh. I love Brandon. He’s

Sara 26:11
A young guy and he’s just killing it, baby. It’s awesome. So

Jason Hartman 26:14
He’s doing awesome. And Brandon Brandon, many of you listening have met Brandon and his father Brent, because they’ve been to lots of our events over the years and Brandon’s a fighter pilot and you know, he was with us and Dubai and San Diego in Newport, Rhode Island and and coming up will be on Jekyll Island. I keep asking Brandon to fly his jet over though, but he never does that. I guess the government just doesn’t let you take on the Jets does it? The fighter jets?

Sara 26:39
Oh, if you can take it home or pick me up on the way

Jason Hartman 26:42
That would be totally fun.

Sara 26:42
That’s probably a big No, no.

Jason Hartman 26:45
But he’s such a funny guy. I love him. He’s just great. But yeah, good stuff. Good stuff. Okay, well, sales are very brisk. Now there are a lot more clients than that who have purchased in the last month or so. Or the last couple of weeks and, and you didn’t mention them Sarah because it’s too big. Frankly, but so if we didn’t mention you, we’re thinking about you, and we love it. And we appreciate your business. So thank you for that. Just We look forward to helping you build bigger and bigger portfolios, any things you’re seeing out there in the market questions you’re getting from people, concerns that you have or clients have, that we should address as we wrap up here, Sara.

Sara 27:21
Not a 10. I mean, I always get the question of people say, well, where should I buy? You know, I’ve already bought in Birmingham. I had somebody asked me the other day, Sean asked me, you know, I already bought in Birmingham, I’m thinking about doing some more deals there. But then he saw my Atlanta email with a couple of properties. And he said, Well, what about Atlanta? Is it risky there because it’s more of a hybrid market. He didn’t say hybrid market, but that’s what he meant, I think. So he just asked, What do I buy? Where do I buy, how do I diversify?

Jason Hartman 27:50
Right, right. Okay. So the answer to that question is, there is no perfect answer on where to buy right? It just depends on your risk tolerance. Your time horizon. But this isn’t this is not an inexact science. Okay. Just Just, of course understand that. But I think one of those questions in there was about Atlanta. And is Atlanta, a more risky market than, say Memphis or Indianapolis? Or some of our Ohio areas? Right. Would that be a fair question, sir?

Sara 28:25
Yeah, that was that was pretty much it.

Jason Hartman 28:27
You throughs Yeah, it’s slightly slightly more risky because it’s a little bit more of a hybrid market. It’s not as linear. That means prices have run up more, but people have made more money there. I mean, look, it’s not it’s not Miami. It’s not Los Angeles. It’s it’s not Boston. It’s those are the really risky cyclical type markets. Right. And there are many more of them that I didn’t mention, but Phoenix and Atlanta are kind of in between. So

Sara 28:56
Yeah, but I think Atlanta’s settled down a bit.

Jason Hartman 28:59
I agree.

Sara 29:00
Hedge funds kind of came in and they laughed. And what I said to this client is as long as you lock in a 30 year fixed rate loan and the cash flow makes sense the day you buy it, which it does, it’s really hard to lose. Because if the values go up, you know, and down a little bit, your loan, your payment doesn’t really change. And the only the only concern would be, you know, if your rents went down, which, again, there’s no guarantee, but historically speaking, you know, we don’t see a big dip and runs, you might see it teeter a little bit, but historically speaking rents, you know, go up. So, as long as you’ve locked in that you’re not on an adjustable loan, you know, those that was when things were risky was when people got into those risky loans. And I read an article yesterday that rates I think, nobody ever talks about when rates go up a little bit. I guess they went up a little bit and as of yesterday, reading this article, they were back down to historic low which is awesome. So take advantage of those low interest rate loans. They’re still here,

Jason Hartman 30:00
They were incredibly low. And I just can’t believe they haven’t gone up yet. I mean, it’s amazing that we can defy gravity this long I, I’ve been famously wrong on that prediction about higher interest rates. It makes no sense the rates need to go up, they should go up. Nobody, either in politics or the Federal Reserve, wants to ruin the party. During their tenure, the only one at the Fed who was willing to do it, and it took a lot of guts is Paul Volcker, who broke the back of inflation set off by the Jimmy Carter era and really even going way back to Nixon. But yeah, nobody wants to take away the Punchbowl. When they’re hosting the party. They always want to let the next person do it. And so Janet Yellen, Ben Bernanke key Alan Greenspan, that’s all been the same, same deal all the way along there. They’re Keynesians, they’re there. They’re sellouts, but when you might be thinking Listen to me, well, Jason, why are you saying Same now why do you think interest rates should go up? Because the situation is not healthy. This is these are artificially low rates. And they should not be that way. It changes the dynamics of the marketplace. It really hurts older people It hurts Savers, it hurts people with money, it encourages a too much risk taking. And that risk taking has a business cycle to it. The higher they fly, the harder they fall As the old saying, right. And that’s exactly what happened in the last financial crisis. You got to slowly take away the Punchbowl. And really just just rein it in. It’s too much. It’s too much it’s too much. But anyway, that’s my opinion, and I’m not going to get my way so but But listen,

Sara 31:47
Jason now get his way. I

Jason Hartman 31:49
know I don’t get my way all the time. But what I will tell you about that is look, take advantage of it exploited use it to your advantage. Stock up on that cheap debt while you can while it’s there It’s It’s It’s wrong. It shouldn’t be this way. But from a personal perspective, heck exploit the hell out of it. Absolutely. Absolutely. So I do want to say something else. You know, Sarah, is there been any progress in opening any of these other markets that we’re working on? We’ve, we are looking but we just a lot of this inventory is just junk out there. And a lot of these providers, these local market specialists would be local market specialists, I should say. They’re just, they’re just not good operators. For example, I love to consider being back in Phoenix or Charlotte, or many other cities around the country and Atlanta has calmed down a little bit because the institutional money the hedge fund type private equity money isn’t so present there. The same is true with Phoenix, although Phoenix is still pretty darn expensive. Any any thoughts or progress there? Sarah, I know you’re you’re working on this every single day as am I

Sara 32:59
Yeah. While we are working on and I almost don’t want to mention it because we’re still doing some number crunching, but we’re looking at Tampa. I know everybody wants Florida and we’re working on numbers and get the numbers to work. That might be an interesting market.

Jason Hartman 33:15
And it’s not just about the market. It’s also about the team about the provider there. There are lots of lots of places to invest. There are lots of deals out there. But if you’re not going to get a group that stands behind that deal, and takes care of repair issues and takes care of management, you can have the best deal in the world but still have a terrible experience. And we have learned that lesson too many times over the years. And we don’t want you to have to learn it by first hand experience.

Sara 33:46
And you know, we’ve also got we’ve got a new provider that does Nashville again, I hate to bring it up. We’re looking at the numbers again, everybody always asks about Nashville. It’s an exciting The market. I don’t know if we could make it happen if the numbers work. We will be bringing you Nashville.

Jason Hartman 34:07
We will see we will see. Well, that is that is the the home of Taylor Swift so it can’t be all that bad. I think I almost got arrested there for stalking her. You heard that story. That’s a joke, by the way. But

Sara 34:20
Speaking of Taylor Swift, there’s an awesome video on Jason’s face that we posted yesterday.

Jason Hartman 34:29
Great. That’s your daughter interviewing me six years ago, Sarah, about Taylor Swift. And I just thought that was so funny.

Sara 34:36
Jason. Jason says, I’m he’s 28 and he wants to be a rock star.

Jason Hartman 34:41
That was my future goal. Exactly. Yeah. I love it. neither of which will will come true or are true. Yeah, funny stuff. All right, good. Well, Hey, folks, this was a very casual unusual episode. It’s just a chit chat with Sarah and I, but we hope you enjoyed it and got some benefit out of it. Let’s wrap it up, Sara, any any other thoughts you want to part with?

Sara 35:03
I know we appreciate you guys. We appreciate you listening and feel free to call or email anytime with your real estate investment questions we look forward to hearing from you.

Jason Hartman 35:12
We’re here to help, we’re happy to help. I shouldn’t give out my voxer one more time, because I haven’t been doing that lately, I got kind of overwhelmed with voxer messages and didn’t get time to play them on the air, which I know I’ve got to do. I’ve got a bunch of them saved up here. But it’s j Hart 88 on voxer Vo x er just download the app. And you can contact me there. And we can actually have a virtual asynchronous conversation, I will play them on the air. So that’s better than going to Jason Hartman calm and using the message app on there for your questions. And I know I’m behind on those two folks. The nice thing is that voxer really allows for a nice two way conversation. And that clarifies a lot for both you who’s calling in with a question and for the listeners on the air when it’s played on the air. We really get it more specific So, good stuff. Thank you all so much for listening. Go to Jason urban calm for the update on the property tour coming up. It’ll be on the website soon when we get it all confirmed 100% the dates are early June on that first weekend of June, and venture Alliance mastermind.com venture Alliance mastermind calm. We updated that site yesterday, you can find out more about our trip to Jekyll Island, the birthplace of the Federal Reserve. So that’ll be fascinating. I hope you join us for that you can join as a guest, and we will look forward to talking to you on the next episode.

Announcer 36:36
I’ve never really thought of Jason as subversive, but I just found out that’s what Wall Street considers him to be. Really now How is that possible at all? Simple. Wall Street believes that real estate investors are dangerous to their schemes? Because the dirty truth about income property is that it actually works in real life. I know I mean, how many people do you know not including insiders? Who created wealth with stocks, bonds and mutual funds? those options are for people who only want to pretend they’re getting ahead. Stocks and other non direct traded assets are a losing game for most people. The typical scenario is you make a little you lose a little and spin your wheels for decades. That’s because the corporate crooks running the stock and bond investing game will always see to it that they win. This means unless you’re one of them, you will not win. And unluckily for wall street. Jason has a unique ability to make the everyday person understand investing the way it should be. He shows them a world where anything less than a 26% annual return is disappointing. Yep. And that’s why Jason offers a one book set on creating wealth that comes with 20 digital download audios. He shows us how we can be excited about these scary times and exploit the incredible opportunities this present economy has afforded us we can pick local markets. touched by the economic downturn exploited packaged commodities investing and achieve exceptional returns safely and securely. I like how he teaches you how to protect the equity in your home before it disappears and how to outsource your debt obligations to the government. And this set of advanced strategies for wealth creation is being offered for only $197. To get your creating wealth encyclopedia book one complete with over 20 hours of audio, go to Jason hartman.com forward slash store. If you want to be able to sit back and collect checks every month, just like a banker. Jason’s creating wealth encyclopedia series is for you.

This show is produced by the Hartman media company All rights reserved for distribution or publication rights and media interviews, please visit www dot Hartman media.com or email me At Hartman media.com nothing on this show should be considered specific personal or professional advice. Please consult an appropriate tax legal real estate or business professional for individualized advice. opinions of guests are their own. And the host is acting on behalf of Platinum properties, investor network, Inc. exclusively.


Jason Hartman is joined by Sara to talk about the upcoming live events and to applaud clients who have purchased properties. They also discuss assigning business to local market specialists based on their ability to properly support clients and terminating a low performing vendor because they were not doing right by the investors. They also gave information on the next Venture Alliance Mastermind and the courses included in the event.

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 complete solution. For real estate investors,

Jason Hartman 1:03
Welcome listeners from around the world. This is your host Jason Hartman with episode number 699 699. That means the next episode will be number 700. Wow, I cannot believe how far we’ve come. And dear listeners, we couldn’t have done it without you. Of course we so much appreciate you listening and telling your friends and colleagues and your enemies about the show. And spreading the word as we have listeners in 164 countries, clients from all around the world who are investing in the most historically proven asset class in all world history and that is income producing real estate as direct investors. So you maintain control over your financial future you are empowered. You are the empowered investor You are not leaving your financial future to chance you are not leaving it in the hands of some Wall Street crook, some greedy CEO, some greedy fund manager, some greedy financial planner, you are in control, you are a direct investor. So we are so happy to be able to share all of our knowledge and experience with you over all of these years. And as we come on episode number 700, our very next episode, it’s just been a real privilege. And I want to thank you all so much for continuing to listen and I know what happens. new listeners Let this be a warning for you. If this is your first episode, you are likely to become addicted. Yes, a lot of our listeners become addicted. They say hey, Jason, I listened to the first episode. And you have me with Hello. So, you know that’s from the movie Jerry Maguire. Do you remember that? You had me at hello very romantical anyway, I just remember that reference. You had me at hello. And I went back and I listened to all several hundred of your episodes over the over the following couple of months and kept up with all of the new ones, as you publish them three times a week. We appreciate that. And really, we’ll do our best to constantly bring you the best, most relevant information to help you be an empowered investor. And today, we have our top investment counselor who’s been with me, oh, most 10 years. And that is Sarah. Sarah, welcome. How are you?

Sara 3:36
Hey, good. Thanks for having me. It’s great

Jason Hartman 3:38
to have you back on the show. I’ve always got to twist your arm to get you on the show. So we appreciate you taking some time out of your very, very busy day to talk to the listeners and congratulate some of our listeners on what they’ve been doing. And we want to talk about our upcoming event. Yes, we’ve got well two events really. We’ve got coming up We are announcing on this episode today, Episode 699. And also talk about how occasionally we have to just terminate a local market specialist and we have to just clean house and do right by our clients. Because sometimes you just gotta say, Enough is enough. It’s the United States like the United States, and the declaration of independence from England many years ago. And then, coincidentally, England’s Declaration of Independence, if you will, from the European Union, the Brexit, which we have a lot more to talk about as that goes, but so far right now, that is shaping up with all of the bad that’s coming with it and I said there would be some short term pain, but in the long term, it’s a slap in the face to the establishment and the One World Government, and I think it will be great, great news for England to have their independence from these bureaucrats at the European Union. And that will be good. And we’re here to help you have your independence as an investor from scams from slimy Wall Street people and from bad local market specialists that don’t take good care of business. So Sarah, where should we start?

Sara 5:20
Well, we’ve got a lot to talk about. But I think what we should start with is, I’m going to I have a new label for this year. And I didn’t tell you this, but I’m going to call this the year of the 1031 exchange. Oh, sigh I am into

Jason Hartman 5:33
that. You know, many, many years ago, I postulated my refi till you die plan, which I think is fantastic. But here’s the the good problem to have, if you will. So many of you have properties that have appreciated too much. It’s a good problem to have. Right? But tell us more about that, Sarah?

Sara 5:57
Yeah, I’m just noticing a huge pickup in And clients that are contacting me, some of them are, you know, properties that they bought through us and they’re, they’re selling them for, you know, some some twice what they paid. And you know, they’re just what happens is the property values go up and the rents hadn’t quite caught up yet, which may or may not happen depending on the market. And so, you know, there becomes there becomes disconnect between that rent to value ratio that we, you know, we preach here,

Jason Hartman 6:26
absolutely, the RV ratio becomes disconnected. It’s not tethered to the value of the property. And here’s what always happens in Sarah, I just wanted to jump in when you said that because the rents, you know, haven’t caught up yet and they may not catch up. They will always catch up, if you will, in these linear markets. The problem is they they usually catch up when the cycle is turning. So that’s when values softened a little bit. And the rents have been going up steadily over the years. affordability declines, and there aren’t as many people buying. And that’s when you see that sort of equilibrium, if you will. And in many of the markets that are, in fact, linear markets, or maybe some of them have a touch of hybrid to them, again, three types of markets, cyclical linear and hybrid markets that we’ve talked about many times on prior episodes. And so the rents always lag, they they catch up very slowly to the prices. But hey, take advantage of it. The 1031 exchange is one of those three great tools that make the single largest expense any of us have in our lives, taxes much more bearable, because income property is the most tax favored asset class in America. So people been doing exchanges. share a little bit of that with us, sir, if you will, like you know, if you happen to remember offhand, where would be a property that maybe they’re selling, and where are they buying and, you know, any any stories from clients on that?

Sara 7:59
Yeah. I’ll give you some examples. And I don’t know if I’m necessarily matching up where the client is selling. I can’t remember where each client is selling their properties. But I’ll give you some examples like, you know, Phoenix, Atlanta, some of the Denver markets, and some of them are like commercial type deals where the cash flow just isn’t as good. But those are some of like, the cyclical markets where, you know, they’ve seen those price increases. They’re there maybe selling one or two properties and buying, you know, three or four properties in exchange, you know, for the one that they sold. We’ve had David from New Jersey, just closed on four in Orlando. So congrats to him.

Jason Hartman 8:36
Congratulations, David.

Sara 8:38
Yeah. And so Orlando is a market where, you know, we did our property tour last November and we had some clients take advantage and and purchase there and so far, so good. And this is this is funny. I don’t know if Joe did a 1031 exchange, but he also bought three in Orlando and he’s also from New Jersey.

Jason Hartman 8:57
Yeah. Maybe they know each other.

Sara 8:59
Yeah, they need to meet Actually, I think they do. I think one referred the other. So congrats to you guys on that.

Jason Hartman 9:05
And by the way, listeners, we don’t want to say clients last names without permission. So that’s why we’re just talking on a first name basis. You know, many of you clients over the years have been on the show, and you know, your last name is out there, without permission from the client, we just want to reference by first name. So we got David from New Jersey bought four properties, and those are in Orlando. And let me just drill down and talk about those because interestingly, one was $89,900. Another one was 99,900. And another one was and and two more were the same price 1099. So those are fantastic. They’re in a couple different cities in the greater Orlando metro area. And then when you talk about Joseph or Joe in New Jersey, also, there we’ve got one for 116 nine, I want another one at the same price. Another one for 1099 Another one for 129 900 or sorry 121 nine. So four properties for each of those. Congratulations. Yeah, that’s great.

Sara 10:09
Well and I’m looking back and that fourth one is actually if you look over that one’s a deal from last year that he that Joe did in Indy so it’s a completely different Omar Sorry, that was an honor.

Jason Hartman 10:19
That’s Indianapolis.

Sara 10:20
Yeah, I just threw that in there. But yeah, I mean, they’re, they’re, they’re doing great. You know, I think that’s a real nice sweet spot that 80 to 120 thousand dollar price point you get a nice you know, I call it a bread and butter rental. Usually they’re they’re going to be you know, like a three bedroom two bath, Mata size property that rents really well. And that’s a sweet spot in a lot of the markets. You know that we do business in Memphis and some of the others as well.

Jason Hartman 10:47
Yeah. And if you don’t like any gluten, stay out of the bread and butter markets. Well, the butters, okay, but the bread is bad for you. So if you’re gluten free, you got to go and buy higher end properties that aren’t bread. Right.

Sara 11:02
So we now have gluten free investors is that no we have

Jason Hartman 11:06
who’s really bad at humor? That’s what we really have.

Sara 11:10
No, I really like that.

Jason Hartman 11:12
Okay, and then let’s, let’s kind of congratulate a couple more of our clients here while we’re at it. Who else we have Sarah?

Sara 11:18
Well, so so we’ve got Raul and he’s from Florida. Now he is helping some family do a big 1031 exchange. And so they’re buying in several different markets. And he’s kind of facilitating it for them. And he’s been a great client over the years. I mean, he’s really built his own portfolio and now he’s helping his friends and family. I want to say we’ve been working with him since at least 2010. And so he’s well diversified. And it’s great to see clients refer their friends and family that, you know, makes me know that we’re doing something right over here. So we appreciate your referrals as well.

Jason Hartman 11:55
Yeah, yeah, we really do appreciate them and and you know, if you’ve been A client of ours that we will take good care of you and any of your referrals. I think one of the main differences between us and the other, this is a very cottage industry, we do a very specialized thing. But there are a couple other players out there who, who are in the biz, if you will. And I think just better than anybody out there, we really have a philosophy number one, more so than others do. And we really understand who our customer is. One of the mastermind groups that I’ve been involved in is a bunch of real estate people and, you know, different rehabbers. And what we call local market specialist or LMS is from around the country. And I gotta tell you, the folks who you see out there who are in this business of presenting and promoting properties to buy and hold investors, a lot of them I really think they just don’t really have a true understanding of who their customer is. And here’s what I mean by that. And it kind of leads to this other point about our, our recent departure, if you will, that wasn’t that friendly, by the way. It was it was moderately friendly. But you know, there was a little, there was a little bit of tough talk in there for a bit back and forth a couple weeks ago, right before I went to Fiji.

Sara 13:21
They just they think

Jason Hartman 13:22
that their vendor is their customer. They think that oh, I gotta be buddy buddy with a supplier and look at we love our suppliers. Don’t get me wrong, we love the good ones that take good care of our customers. But if if if they, you know, everybody, this is human nature, folks, we all know this. We all do this to one extent or another. At the beginning, we’re really excited. We’re really grateful. It’s a new relationship, new business. Hey, bring it on. You know, you’re it’s like the it’s like when you’re first dating someone, right? Everybody’s on their best behavior. They’re dressing Well, they’re, you know, they’re getting ready and, and really taken care of and being considerate of that relationship. But eventually you’re gonna take things for granted. And, and that happens and we got to be constantly on guard against that when we get negative feedback about a local market specialist from one of our clients, whether it be on the on the property maintenance and repair side or the management side, or whatever we get on their case. And Sarah, that’s one of the things I love about you. You know, so many years ago, I remember during the Great Recession, you you were saying you came to me one day and you said, You know, I really think we do something, we really do something special for people we’re really helping them. That’s what this is all about. Look at both you and I I know you are now two financially independent, okay, so we don’t need to do this. We’re doing this because it matters. You know, it’s a cause it really feels Like, it makes a difference. That’s, that’s what gets me out of bed in the morning. And that’s what I get excited about. But

Sara 15:07
yeah, well, Funny enough, I actually had somebody call was a referral from another client. And he called and he said, Well, you know, I want to be honest, I’m, I’ve made, you know, three phone calls, you know, I’ve talked to a couple other people that do something similar what I think is similar to what you do, and now he’s not a podcast listener. So I’m getting them engaged. But you know, this is somebody that just was a word of mouth referral from somebody else who purchased through us. And he said, so you know, what sets you apart from your quote, unquote, competition. And, you know, I first I kind of told him a little bit about what we do and gave him the background info. And I said, You know, I think what sets us apart is that, you know, we actually like, counsel our clients on the big picture stuff and, you know, really talk to our clients and we’re here as an extra set of eyes and ears. We’re not attached to any one market and no, so we were about 10 minutes into the call and he said, You know, he said, I’ve only been on the phone with you for about 10 minutes, he said, But I’ve talked to a counselor quote unquote counselor, you know, from another company, and he said, Man, there’s just been so much add value to this call in comparison to, you know, speaking with that other representative. So, you know, we’re getting a good client feedback. I I don’t really even call it competition these days because and I don’t say that to impress upon anyone or to brag, I just think we do something different. I think that we really do bring value to our clients.

Jason Hartman 16:26
Yeah, I would certainly agree and I know the clients listening who are the listeners who are clients listening would agree with that too. So that’s a great thing and we’re happy to do it and we just we just love doing this stuff because it’s it’s we’re taking business away from Wall Street. We want to move as much money away from these Wall Street Style investments as possible income properties, the most historically proven asset class in the world. Okay, so row, let me See how many properties for Oh, that looks like five properties, right? 12345 I’m seeing five of them here.

Sara 17:07
And these are actually his, you know, his family’s portfolio. I didn’t really take the time to look up his personal deals, but I it’s, he’s working on a 1031 exchange. And so they’re doing great. And then, you know, another client, john was another word of mouth referral, and he recently closed on three in Memphis.

Jason Hartman 17:30
He’s got Yeah, all three are Memphis and those are, let’s just, let’s just look at the prices of some of these. Okay, so one of roles was a little bit more expensive. One 139,901 39, nine, and 124 110, one for 72,500. So, kind of a good mix there. probably have a and b and maybe that 72,000 ones a C plus type property. JOHN 84,900 101. 898 there’s an odd price in 94,900 for John’s three properties. Congratulations, john. That’s awesome. Those are all in Memphis. And then we’ve got Steve, who’s been buying with us for a while. got three. That’s Southern California buyer. Orlando. One in Orlando. Two in Memphis, right?

Sara 18:19
Yep. Those were from this year and he’s purchased others in Chicago and Steve, we got to get you in our venture lions mastermind group and it’s about

Jason Hartman 18:29
times we’re going

Sara 18:31
to get you on the podcast.

Jason Hartman 18:33
You got a great story.

Sara 18:34
I actually just talked to him today and we had to cut our call short because I was telling him I got to record with Jason but right client he’s in So Cal by me and we he’s been to many of our events and we’ve had some some good chats but he’s, he’s doing great you know, he’s, a lot of our clients are really on a mission. In fact, I talked to john and this other client here yesterday. And I mean, he’s he’s on a mission To buy 10 this year 15 next year, he’s got a very aggressive plan. He’s already asking me, what do I do after, you know, my financing runs out, I gotta go commercial, you know, financing. And so we’ve got some clients soon big things good,

Jason Hartman 19:13
good stuff. And then of course, there’s Gary and that’s Gary Pinkerton because he was on the podcast before so everybody knows his name and, and he’s got a bunch more

Sara 19:20
to huh. While he’s working on it. these are these are some deals that you know, haven’t closed yet, but I gotta tell you, you

Jason Hartman 19:27
me and Gary’s 100% Memphis at this point right now, for these new purchases. Yeah,

Sara 19:32
I didn’t tell Gary this, but I had some, like two clients that were pretty upset with me because we, you know, we had like 11 properties in Memphis become available last week. And I mean, like, three came out one day and you know, five another day. And so I was trying to send them out to our buyers as quickly as I got them. And I mean, we literally put those 11 properties under contract same week, and so Gary stole some from under a few I didn’t tell him that.

Jason Hartman 20:02
Hey, Gary, congratulations, the early bird gets the worm As the old saying goes, and and there’s another great saying, I like this one. You know you you’ve heard that good things come to those who wait. Well, there’s a add on to that. Good things come to those who wait, but only the things leftover by those who hustle.

Sara 20:22
I love that. Yeah.

Jason Hartman 20:24
Good stuff. And, you know, we actually I think this was a pretty good lead into our next, maybe a little discussion here as a side. That is we have been really racking our brains. We’ve been going back and forth our internal team on voxer. And on our monthly team calls where everybody gets together. And just on random discussions here and there too. And we’ve been talking about we want to do another property tour in September. And we were thinking Gosh, do we do it in Chicago? Well, right Now if you want to buy a property in the Chicagoland area, they can’t deliver anything to you until late November. If you want to buy a property in Memphis right now, you’re probably looking at somewhere around November also, depending on which provider you’re working with. We were going to do Port Richey, Florida, we you know, that was a that’s a newer market for us. Just it’s a Tampa, suburb, Tampa, Florida that I really like. But Tampa is a little too expensive. And the the provider there just can’t get enough inventory. We just don’t have enough inventory in any one place to be able to host a property tour. And it’s not the first time we’ve had this as a struggle. But we made a decision as to how to approach this problem and make it work so you can still come out and meet our local market specialists. Get a good overview of different markets and Sara, do you want to comment on what we’re going to do? Or do you want me to tell them about it? The big news, this is the big next event.

Sara 22:07
This is the big news. Well, I and we toyed with the idea of like, should we do like another meet the Masters type event? And you know, we decided no, our meet the Masters event is in January, you know, special event that, you know, we do, we like to do that in January, where we bring all of our providers in. So we’re going to do we’re going to do is we’re going to do a new event with new content, lots of good education, as always,

Jason Hartman 22:33
and we don’t even have a name for this event. It’s called the something event. I don’t know what it’s gonna be something about real estate investing, you can be sure that

Sara 22:43
Yeah, and we’re gonna bring some of our top providers with the best inventory to our event in Can I say where it’s going to be?

Jason Hartman 22:53
Yes, it’s going to be in Phoenix. And we do not have a venue yet. But we do have a date because we We’ve literally just decided

Sara 23:02
we don’t have a venue. But we have

Jason Hartman 23:04
here really, folks, we need help over here. We are really all confused and disorganized. I’m just kidding. We’re actually not as bad as we look. But, you know, we’re, we just want to get this out there. So all of you can start making plans. Okay? This will be September 10, and 11th. That’s a Saturday and Sunday, September 10, and 11th. A, the ominous date of 911. I just noticed that. So you can all remember this easily. As bad as that association is, unfortunately, but September 9, or sorry, September 10, and 11th. Okay, in Phoenix, where I live, and we’re assuming another one of our investment counselors will be living in Phoenix moving from the Socialist Republic of California to Phoenix. We will be there with I believe, and we’re vetting and picking now for maybe only three, three or four of hours. teams from different markets. And if, if 50 or 80 of you show up between three or four different providers, we can probably have enough properties for you. But we can’t do this in any one market, because we just don’t have enough properties. If If 40 or 50 of you show up in Chicago land or Port Richey or Memphis or Indianapolis or wherever we might want to say we’re doing a tour. We just we just don’t have enough inventory in any one market. It’s too scarce. So,

Sara 24:36
there’s another thing I want to just mention, you know, that people may not realize is, we don’t want to necessarily overwhelm any one provider either, because we want them to do good rehab jobs.

Jason Hartman 24:51
Before Haven’t we Yes,

Sara 24:53
yeah. I mean, it’s really it’s it’s really a strategic thing to not put you know, 30 people On a property tour, even if we had that inventory, and we knew they were going to be done in a couple months, we don’t want to add pressure and you know, have issues with rehab delays and you know, add, add to that

Jason Hartman 25:12
big a big part of this. And you know, it is a total art. There’s not a science to it, it’s an art, I will say, a big part of this is managing the way we don’t allow business to the local market specialist because remember, these are, these are mom and pop businesses. In most cases, there’s really only one exception in our network. That’s not sort of some level of a smaller mom and pop business is a very fragmented industry. And it’s a very specialized thing that we’re looking for in these providers, these vertically integrated companies that provide acquisition, rehab management, either internally or externally, and ongoing construction support. And there just aren’t a lot of companies that do this stuff. So, knowing how to dole out the the business to these different providers is a real art form. And Sarah, you engage in this constantly, you’re always talking about this. Almost every other conversation we have is about this topic, I would say,

Sara 26:16
well, and I’m so thankful to our clients because we’re getting constant feedback. You know, we know where the property management teams are doing the best, where the rehabs are the best, you know, where the rehabs are slowing down, where there’s turnover in property management teams, for example, you know, our clients are giving us this constant feedback. So if I know a company’s going through some turnover, you know, I might just say well, you know, let’s let’s take a step back from that market

Jason Hartman 26:40
way off of them right

Sara 26:42
yeah, let’s let’s have them you know, get out get all their ducks in a row. And you know, we can jump back in when it makes sense. No, no, sir. I’m surprised you

Jason Hartman 26:49
didn’t say they should get their chickens in a row. I know. I knew you were gonna say that.

Sara 26:54
I didn’t know you were gonna say chickens, but I need to pick that one up. When else yeah.

Jason Hartman 27:00
Get their ducks in a row

Sara 27:01
their dogs in a row, whatever you can put anything you want in a row. I’m very satisfied.

Jason Hartman 27:07
And and for new listeners that don’t understand the reference, Sara always revises famous old sayings. Instead of shoot yourself in the foot. She says treat yourself. It’s funny. It’s pretty funny, though.

Sara 27:20
Yeah. So I, you know, this is a good segue into, you know, what we wanted to discuss kind of firing a recent provider, if you want to call it that, but I know you want to kind of chat about

Jason Hartman 27:32
that. And, you know, every so often we I don’t want to say this was a bad apple because i don’t i don’t think it was a bad apple. But it became I think this relationship, just frankly, got stale. And we sent them a ton of business. They were making a lot of money. And then they just got really, really, frankly really cocky, you know, to where they they just didn’t appreciate it. It’s like they Almost acted like the customer was their enemy or something, you know, it was kind of shocking to me,

Sara 28:06
it was really unbelievable. And they were doing going as far as to making, you know, they were, it’s like they had some challenges with their management company about a year or so ago and, and they made some changes to their purchase agreement to try and fix those problems with the management company. And they kind of like snuck some things in their purchase agreement that weren’t in the investors favor. And so little by little, I was getting that client feedback, just realizing that the agreement was not in alignment with what the clients were trying to do. And we tried to, you know, get them to make some changes. And, I mean, we’re talking about things that like all of our other providers, don’t do it just not industry standard.

Jason Hartman 28:48
So let me tell you what happens here. That provider that local market specialist, I know who else they’re working with, okay our so called competitors and they will simply Go to them and say, Hey, I have more inventory for you now, because I’m not working with Jason’s group. And guess what? They’re working with them because they did not stick up for the customer the way we did, and so that that customer, that investor will have these lesser experiences, these these not as good experiences with them, because they went through another provider that wouldn’t go to bat for the client. That’s the difference. You know, they’re, they look at the local market specialists wants the provider who’s easy to work with, okay, or wants the referral source like us. It’s easy to work with, it doesn’t give them a hard time. Right. And, you know, we give them a hard time we call them out on some stuff. And so finally, this guy just said, Hey, I can’t do it anymore. He kept wanting to have private conversations with me as though he’s gonna convinced me to sell out my clients and I’m not I’m not doing it. You can have conversations with our whole team. Everything’s transparent. That’s it, you know, you’re not going to talk me in anything that they’re not going to agree with. Sarah, I don’t know why he needed to pull me aside and not include you in the conversation is if he’s going to, I’m going to overrule you and a client, you know, can’t break. It’s ridiculous.

Sara 30:24
Yeah, we just, you know, we want our clients to be taken care of. We want property management agreements to be reasonable and fair. And, you know, there are some things you have to like negotiate your management agreements, and some of them don’t really budge on it. And sometimes you just have to go with another management company. And that’s kind of what happened here. We said, Okay, if you’re not going to make changes to your management agreement, we’re going to refer them, you can sell them properties, but we’re going to refer them to another property manager. They didn’t like that at all. They didn’t like that. And so they they slipped something in their purchase agreement that required the buyer to use their property management company or their foods.

Jason Hartman 31:00
sneaky bastards.

Sara 31:02
So it was like borderline unethical and we call them to the table and I think we mutually agreed that this relationship was not working. And so you know, it is what it is. But Justin

Jason Hartman 31:13
just so you know the saying is called him on the carpet.

Sara 31:18
We called him on the carpet.

Jason Hartman 31:21
We call them on the call them on the table. You still do it. It’s so fun. I just love it. I love it. It’s great. Yeah, so So anyway, onward and upward. We’re done with that relationship. But you know, Sarah, it reminds me on days when the stock market the modern version of organized crime when it’s closed on holidays, CNBC, the mouthpiece for the modern version of organized crime, Wall Street, will show these reruns and they’re these really cool documentaries. And they’ll have documentaries about Walmart, for example, and I remember watching the Walmart one, I think I’ve seen that one. twice now. And the reporter says to the CEO of Walmart, he says, you know, these suppliers come in here to Bentonville, Arkansas, and they leave beat up. Like you just, you know, Walmart will not, will not give them a good enough price for their merchandise. If they want to sell their product, their widget in a Walmart store. You guys are just too greedy. You’re not you’re not giving them enough money for your suppliers. And I’ll never forget it that the CEO of Walmart looks right at the camera and says we are the agent of the customer. And our duty is to bring our customer the highest quality product at the lowest price. We are the agent of the customer. And that’s how we feel. We are the agent Where the investor, not for the supplier, the suppliers important to be sure we love our suppliers, the good ones, but we get a bad apple and we’re gonna get rid of them. Because you know, there’s just life is too short for that. So that’s the scoop there.

Sara 33:15
And just so our clients know that doesn’t mean you got a bad property and that doesn’t mean you get rid of your property, you know, we will help you find

Jason Hartman 33:21
out where you might want to get rid of your manager.

Sara 33:23
Well, if it’s an affiliate manager, yeah, and then we’ll we’ll let you know who our other clients are using in the marketplace. And I mean, that’s the power of this network is, you know, we, we know of other property managers and you just

Jason Hartman 33:35
lawns and we’re getting continual feedback, and we bring that feedback to all of you, and that is so important. Our job is to aggregate feedback, aggregate knowledge and share it back with you, our clients. And that’s what we’ll continue to do. Okay, Sarah, we got to wrap this up. Let me just tell you about not one but two events. Of course, there’s the event we already mentioned, though, we don’t know what the heck It’s called event yet. And that’s on September 10 and 11th in Phoenix, Arizona, and we don’t know where it’s going to be. But you know, I mean,

Sara 34:10
like, should we give away a pair of tickets to the investor that names the event?

Jason Hartman 34:16
Now, that’s my idea. But you know, we’re not set up yet. Maybe we’ll announce that on the future. That’s a good idea. That’s pretty good. But But let me just tell you what the content will be built around. The content here is going to be built around using software to evaluate and manage your real estate investments. And of course, you know, with our acquisition last year of real estate tools, this fantastic software company that has some fantastic excellent software products, including property tracker property evaluator property, flipper, some great things. We are going to drill down on Really a how to class on how to use software to make your real estate investing so dramatically, so dramatically, much easier. Okay. And we are going to have one of our clients who is a professor in San Francisco. And that is Michelle, who you heard on the show several episodes ago, Michelle will actually be teaching part of this class along with me, and she will be navigating you through. And you know, one of the great things with someone who’s actually a professor who’s actually trained to teach people things, unlike me, I just talk you know, very random tangent, or you know, all of that stuff that they really know how to structure a curriculum, so people can learn more easily and retain knowledge more easily. And so Michelle will be teaching part of this class along with me and then we will have Three or four of our local market specialists. They’re from different markets around the country, who will hopefully come in with their teams with their property management people. And it’ll be somewhat like a meet the Masters event, but we’re going to do another thing differently. And one of our wonderful clients and venture Alliance members, Elizabeth, who is a fantastic executive, for a large publicly traded company you’ve all heard of, and probably a lot of you are using right now. I won’t mention the name. Maybe she will on a future episode if she comes on. But Elizabeth suggested this and it’s a great idea. So thank you, Elizabeth. We appreciate it. And by the way, today happens to be Elizabeth birthday. So Happy birthday, Elizabeth. Well, actually the day of us recording that’s not the day your birthday. Yeah, absolutely. It’s gonna be about a week and a half after we record for this one. She’s suggestions she says Jason. Before you hold the next meet the Masters event. I want you to get all your local Market specialists there a day or two early, and I’m going to teach them presentation skills. And I thought, you know what, Elizabeth, that is a fair criticism, because they, some of them just, they’re great at what they do. They’re just not presenters. They’re just not public speakers. And so what we’re going to do is we’re going to do a whole different format, they’re not going to get up and do these long presentations. And some of them are good, and some just ain’t that great, frankly. But what we’re going to do is I’m going to put them on panels, and I’m going to interview them. And I’m going to ask them a bunch of questions that we’ve already determined in advance that you all want to hear the answers to, and then the audience is going to have a chance to ask them a lot of questions, as well. So we’re going to do a lot of panel discussions. I think it’s just going to be a much better format. I’m really excited about it, and it’ll be a good practice run. For our Meet the Masters event coming up in January. Okay. So that’s the event basically in a nutshell in Phoenix on September 10, and 11th. Now, before that one week before that, in beautiful Seattle, we are going to have our venture Alliance event. And that will be actually on Labor Day weekend. So that’s another venture Alliance event. I think that’s our maybe our sixth event. Now we’ve our first one was San Diego. Then we did Newport Rhode Island saw the mansions there we went to Dubai. And where else did we go? We did something else. How come I can’t remember Ethel island? This is my mind. I thought. Oh, thank you. Jekyll Island, Georgia. Yes, thank you very much. And so this one will be in Seattle. It’s gonna be a fantastic event. That’ll be Friday, September 2. We’ll start on Friday, September 2 for dinner. And then all day, Saturday and Sunday, September 3, and fourth, go to venture Alliance mastermind calm remember if you’re not sure about joining Winning the venture lions mastermind yet, if you want to really network with other investors and do creative deals and do what we call ground floor deals that offer you a chance to basically pay for your membership for a couple of years or at least one year. So you’ll have ultimately a free membership with some special deals we offer only to venture Alliance members. Based on that you can come as a guest, and it’s just a one time guest fee of $2,000. If you want to bring a spouse or significant other to that event or business partner, it’s $1,000 more so 3000 for the whole weekend. And again, this is a high level thing. These are first class events. Everything is paid for it’s just a phenomenal first class experience as it should be. This is the venture Alliance. This is a this is a high end deal. Okay, so nothing like the price of our regular events that are to a wider market. But just wanted to tell you venture Alliance on on Labor Day weekend, and then the following weekend will be our Phoenix event that we don’t know the name of yet. So that’s it. Sarah, thank you for joining me. Any other comments? Before we go?

Sara 40:13
No, I look forward to seeing everybody in the fall. And thank you so much for having me.

Jason Hartman 40:18
All right, happy investing everyone. Visit Jason Hartman calm. If you have any questions, you can contact us there. And one of our investment counselors will get in touch with you and help you with anything. You can also get me on voxer at Jay Hart 88, happy investing to all and we’ll talk to you on the next episode.

Announcer 40:37
I’ve never really thought of Jason as subversive, but I just found out that’s what Wall Street considers him to be. Really now How is that possible at all? Simple. Wall Street believes that real estate investors are dangerous to their schemes? Because the dirty truth about income property is that it actually works in real life. I know I mean, how many people do you know not Including insiders who created wealth with stocks, bonds and mutual funds. those options are for people who only want to pretend they’re getting ahead. Stocks and other non direct traded assets are a losing game for most people. The typical scenario is you make a little you lose a little and spin your wheels for decades. That’s because the corporate crooks running the stock and bond investing game will always see to it that they win. This means unless you’re one of them, you will not win. And unluckily for wall street. Jason has a unique ability to make the everyday person understand investing the way it should be. He shows them a world where anything less than a 26% annual return is disappointing. Yep. And that’s why Jason offers a one book set on creating wealth that comes with 20 digital download audios. He shows us how we can be excited about these scary times and exploit the incredible opportunities this present economy has afforded us we can pick local markets untouched by the economic downturn, exploited packaged commodities investing, and achieve exceptional returns safely and securely. I like how he teaches you how to protect the equity in your home before it disappears and how to outsource your debt obligations to the government. And this set of advanced strategies for wealth creation is being offered for only $197. To get your creating wealth encyclopedia book one complete with over 20 hours of audio, go to Jason hartman.com forward slash store. If you want to be able to sit back and collect checks every month, just like a banker. Jason’s creating wealth encyclopedia series is for you.

Announcer 42:49
This show is produced by the Hartman media company All rights reserved for distribution or publication rights and media interviews, please visit www dot Hartman media.com or email media at Hartman media.com. Nothing on this show should be considered specific personal or professional advice. Please consult an appropriate tax legal real estate or business professional for individualized advice. opinions of guests are their own. And the host is acting on behalf of Platinum properties, investor network, Inc. exclusively.


In this episode, Jason Hartman is joined by local market specialist Carrie to talk about the Cincinnati real estate market. She shares that the Cincinnati real estate market passed all 13 fundamentals of what is required to make a market viable as a rental market. Jason also explains the LTI ratio (Land to Improvement) ratio and plays an audio track of Closing the Gap – How to create a more inclusive global economy video.

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 complete solution for real estate investors.

Jason Hartman 1:04
Hey, welcome listeners from around the world. And as I say around the world, we are traveling actually I’m here with Carrie and we are in the airport. Yes, we are in at CVG airport. And that is because we are just leaving our Cincinnati market tour our property tour and creating wealth seminar this weekend. And Carrie and I wrote back together Of course, Coco was over there looking so beautiful. And she was the star of the weekend. But we had some great properties do did we carry?

Carrie 1:34
We did we had some excellent properties for our investors this weekend.

Jason Hartman 1:38
Yeah, it was a great weekend. You know, we had I don’t know, I think we have about 32 people or so. And we looked at properties and I think we easily had people purchase over a dozen properties. Probably this weekend. We did the creative world seminar. And what I liked about this property tour is the way we did it, of course over two days as usual, and we started the creative world seminar Saturday morning. Then went to lunch and then toured properties. And then of course, we have this grand dinner together. Was that awesome?

Carrie 2:06
Oh right. That was amazing. It was just an outstanding dinner by our, our provider and everyone raved about it.

Jason Hartman 2:13
Our local market specialists, we went to their home, their 5300 square foot mansion. And it was just beautiful. Like we said, when we walked in, it was like being at a wedding reception. It was just gorgeous.

Carrie 2:25
Oh, the layout, there was about four or five dining room tables. Yeah, that was awesome. bartender was great.

Jason Hartman 2:32
That was a lot of fun. I think everybody really enjoyed meeting each other networking together and just having a good time together. So that was great. And then this morning, we did we finished the creating wealth seminar. And then we did another bus tour again, two days of the bus. And so there were a lot of good properties to look at. We looked at new properties, brand new properties, we looked at historic property. I just I couldn’t believe how beautiful some of those properties were and how nice some of those neighborhoods By the way, I want to give a shout out to just I mean, we, I hate to do this because every client I didn’t mention things well why didn’t you mention me? But I don’t have a list in front of me we’re standing at the airport ticket counter literally right now. Maybe we’ll take a picture of a stewardess and, and and we just grow also carry how many states? Do we just drive through?

Carrie 3:24
Yes, we actually we went through three different states on the road to the airport,

Jason Hartman 3:28
but that’s not as big a deal as it sounds. Because it’s only about an hour drive from this beautiful hotel. We stayed at the AC Marriott Hotel. And this is a part of the Marriott chain that they’re bringing over from Europe and it is gorgeous. In fact, the right word for that hotel is what is it carry sweating. Yeah, very sweaty. Yeah. What do you like about that hotel.

Carrie 3:51
I mean, everything from the decor. The staff was phenomenal.

Jason Hartman 3:56
It was brand new, brand new, modern, contemporary. It was just beautiful. Yeah, it was. So driving through the three states. Yeah, we drove through Ohio, Indiana and Kentucky today just to get to the airport. Right, right. It’s not that big a deal. That was about 45 minutes an hour, no big deal. Hey, so talk to us about some of the properties. Let the clients know about some of them. These properties will probably be sold by the time you hear this podcast episode, but you know, there’s some good stuff and we can find more inventory for you. And just give an example of a couple of them maybe,

Carrie 4:30
yeah, yeah, definitely. Um, we went through about three different cities, four or five different cities, Hamilton, and

Jason Hartman 4:39

Carrie 4:40
roll the Liberty town and we saw some good before, during and after construction, some two bedroom, one bath, three bedroom, one and a half baths. We thought all ABC classes which really gave a good perspective to new ambassadors and seeing what kind of construction goes through each property. You know, they See the before they all, you know, Oh, it smells in here, look at the floors, but then they saw the after. Right. And they were just surprised. It was just amazing the transformation they can do. And yeah, and we had a lot of interest in the properties. So we also we hit up Middletown, I mean, we went to two or three more cities today. So it was a good I like the layout because, you know, like Jason said, you got to do the seminar in the morning, two in the afternoon, if you had to leave, you could leave, right, you know, you got to pick and choose which one you wanted to go to.

Jason Hartman 5:34
Right. Right. That was that was a fantastic arrangement. But it really our local market specialists here really up to the bar for our next property tour, unfortunately. So if you came to this one, and then you come to the next one, boy, we’re gonna have a tough time competing with that. That was it was very well done. Very well done. One of the things I wanted to refresh your memory on is what I call the lucky 13 and the lucky 13 are these fundamentals. That helps you pick a market. And I’ll just go through them real quick because we went through them, of course this weekend in the seminar, but they are number one cost of living cost of living, transportation, employment and job growth, education, the regulatory climate, the growth in the community, the rent control concept, the taxation, the regulatory climate, is it landlord friendly, you know, we want to invest in markets that are friendly to our causes landlords, even if it made any sense, and it doesn’t, it doesn’t even come close to making sense. But we wouldn’t do business in places where the there’s an anti landlord sentiment, that’s certainly not this market. So that’s great. Weather, crime, culture and arts, health and health care, funding, recreation, population density, and overall real estate market trends. And I tell you There are some great employers here. Some established stuff really nice. Yeah. Any any comments on that, Carrie?

Carrie 7:07
Yeah, we drove through quite a few communities that I mean, they have the Westchester hospital. p&g, GE, IKEA. I mean, they have some great, great employment opportunities for for renters here.

Jason Hartman 7:21
The other thing I noticed about this market is that this is a you know, it’s a conservative, stable market, where people they grew up here, they stay here, because their family is here. I just I just heard that and notice that over and over. And I always make it a point to always have a lot of conversations with the service people. If I’m in an Uber car or a Lyft car, I’m going to talk to them. You know, where are you from? Are you from here? I mean, the people don’t tell I have many people that question people at restaurants, and they all say oh yeah, I grew up here, and I’m staying here and my family’s here and and that’s that’s The kind of market this is, again, these are there are three basic types of real estate markets around the world, the linear cyclical and the hybrid. That is the hybrid of the two. And this is definitely a very linear market does not make the news, nothing too exciting. And people stay because of family. In fact, it even goes further than that in terms of the family dynamic, which is interesting, some of the homes or historical homes here, and they’re not your sort of typical rental. I mean, if you talk to any investor, right, Carrie, they’ll say what do they want? How many bedrooms and baths?

Carrie 8:33
Yeah, they want the three bedroom, two bath, you’re not gonna get it here.

Jason Hartman 8:37
Well, you won’t get it here. But it’s not. You can go out of the box here too, in the sense that a two bedroom one bath actually works pretty well as a record here. And why is that it’s because grandma used to live in that house, and they want to move into that house and have some affiliation or connection to that. So the roots go pretty deep in that that’s that’s amazing. To me,

Carrie 9:01
yeah, a lot of the neighborhoods we go through if we saw a two bedroom, one bath, you know, the house next to them has the same two bedroom, one bath. So it’s it’s based off of the the neighborhoods you’re in, in which districts you’re at to get the A, B and C, of course in class properties.

Jason Hartman 9:17
Yeah, definitely. One of the other things I just want to share is talk a little bit about the fantastic graph. In one of the rich dad books. Robert Kiyosaki is one of his books called who took my money. And this graph I showed it again, and it’s just startling to see it. It shows $10,000 invested in a typical single family home, versus $10,000 invested in the s&p 500 index over 10 years. The $10,000 in the s&p is worth just over $17,000. And that single family home that humble single family home, I say the most historically proven asset class in the entire world. It was worth $159,000. Now granted, you bought it with leverage. So there’s a loan to pay off. And 10 years later that loan balance might be I don’t know $83,000. But all things considered if it was just an interest only loan, so the loan balance stayed the same. The real estate, the single the humble single family home outperform the sophisticated glamorous s&p 500 index by 793%. Wow. 793%. Can you believe that now? Yeah, it’s amazing. It’s just amazing. And that’s because the real estate really income property, especially the special type of real estate and call income property is a multi dimensional asset class. So you get your return from a lot of places versus the stocks, either one dimension, just capital appreciation only. Or maybe It’s a dividend paying stock and you get it from dividends too.

Carrie 11:03
Yeah. And I like the the example you brought up about your house in California, you know, showing the difference between the land

Jason Hartman 11:11
right, the risk evaluate.

Carrie 11:13
They, I think a lot of investors, you know, really opened up their eyes. And I mean, it was just amazing the returns you can get just from, is it the land? Or is it the construction? Right,

Jason Hartman 11:23
right, like the improvement or the land that house sitting on the land or the land itself. And I talked before about this on the podcast, if you want to dive, take a deeper dive into this, just go to Jason Hartman, calm and type in Hartman, risk evaluator, and you can get a whole episode on this, but I’ll just touch on it now for a moment since Kerry mentioned it. And basically, what it talks about is is a phrase I coined called the LT ratio. Most real estate investors or even non investors that just buy their own home, have heard of the LTV ratio, the loan to value ratio. This one is the land to improvement ratio. And it is a very, very telling ratio, because it really helps us determine the amount of risk built into any investment. And when land value the L and the LTI on land is a big expensive part of the component. That investment becomes far more risky. When you have the land being low costs, I mean carry here, this land we looked at over the weekend as a component, you got to remember you’re buying two things. You’re not buying one thing when you say oh, I bought a property that you know people say that but what they really usually mean is they bought two things. They bought a house and then they bought a piece of land, and they bought them together is one thing, but it’s really two component parts. So the land here super cheap, right? Oh yes. And we love these kind of markets because the land is either free it’s literally free because you if you had to rebuild That house, you know that it would cost you more than you paid to buy that to just to build the house, not even including the land, but the land is so cheap, even if you buy the lot, it’s maybe only $15,000. So the equation, and the house sitting on the land might be 85,000. So that’d be $100,000. All in deal. And 85% would be improvement value, meaning commodities, right? What’s a house made? It’s made of lumber, and copper wire and petroleum products and all that kind of stuff. So it’s, it’s really you’re a commodities investor in a way. But you’re investing in commodities with three decade long fixed rate financing, and that financing you get, you don’t even have to pay the debt yourself. You get the tenants to pay for it. great deal. Hmm.

Carrie 13:49
Yeah, that was that was key point to that. Yeah, that’s really good.

Jason Hartman 13:52
So that house in California that Gary mentioned, that one had a very high land costs. 81% It’s literally the equation is flipped on its head at 1% land and 19% improvement on that $815,000 house I bought there so far, far more risky. Yeah, absolutely. Yeah, just a bit. Yeah, yeah. And if you want more details on that, we could discuss that for like 45 minutes, just go and find the podcast episode on that. There are a couple of them out there. Just go to Jason Hartman, calm and type Hartman, risk evaluator or LTI ratio or any of those terms and you’ll find it and it’ll be great. What are their highlights from the weekend? Do you want to share with listeners and then I want to get to a little video that I want to play for them that I think they all enjoy? Yeah, actually, I’m not gonna play the video, I’m gonna play the audio track of the video. So just to be clear, you’re not watching us right now. It’s audio only. But yeah,

Carrie 14:47
Well, what I liked about this tour is and all the other tours, you know, investors come together and they get to hear each other’s stories, too. Yeah. So I mean, during the lunch and breaks, you know, they’re they’re feeding off of each other and they’re experiences and they get the real live you know, picture of what goes on in the gods the bad and the ugly. Yep. So that’s always a bonus to come to these events and see that and meet people and network with them and know you’re not alone.

Jason Hartman 15:13
Right? know you’re not alone and know that we are for real. Right? Okay, that’s the other thing. I mean, there are so many people out there who are you know, they’re doing a podcast, they’re doing internet marketing or online and you hear their stuff and you know, they’ve got educational products or whatever, but you never really meet them. And you never really meet their clients to see that they actually have real clients of course, they’ve always got a few fake testimonials, their, their brother, their sister, actor, whatever, you know, they there are websites, you can buy these fake testimonials on I’ve seen them out there and fake reviews and stuff like that. But you can you can meet our clients in the flesh. We have several events per year. Come to the next one, make it a point to come to a live event. Everybody who comes The evaluations we get are extremely positive. The only time I get a negative evaluation Carrie, can you guess what that might be? Talking about politics. That’s when occasionally I’ll get that leftist communist in the audience. Who, who says, you know, you should just stick to real estate harp and shut up about this stuff. But, you know, sometimes I just get off on a tangent, you know, well,

Carrie 16:32
I don’t think Coco is too happy with you calling her a democrat either.

Jason Hartman 16:35
Coco is a total Democrat. You’re getting that she sleeps all day. She doesn’t have a job. She gets free health care. She gets free food. I mean, free travel, actually, you know, she’s going on the plane with us now. Coco gets everything free. She is a total Bernie Sanders supporter completely. I mean, that’s, that’s who she wants to be president. She doesn’t like Hillary too much because she knows Hillary is a crock but You know, Sanders, well meaning guy. At least I can say that for him, even though he lives in fantasy land. Oh, gosh, I don’t know. Okay, well, maybe we should put more ahead on this stuff because now I’m getting some bad reviews right now. Oh gosh,

Jason Hartman 17:14
well, hey, listen, um, I want to play a video for you that I think you’ll find very interesting as it relates to the future and what it means to real estate investors and the economy overall. time permitting me I’ll even plug two of them in here. There’s a funny one from the weekend. I want to play from you for you too. So let’s do that. Carrie, go to Jason Hartman comm check out some of the video of our events and come to our next event. We haven’t announced it yet. But any thoughts or ideas on where you think our next tour might be? We got to survey all our investment counselors and our clients a little bit and do that, huh? Yeah. Do you have a you have a preference, Carrie?

Carrie 17:53
You know, we have a few new markets that would be interesting for us to tour and you know, the Quad Cities Yeah, Port Richey. Yeah, we can do that there’s a few options.

Jason Hartman 18:04
We’ve been asked if we would bring in tour to Port Richey. So we already got that. We’ve been hit up for that one. So we might do it. Who knows? We’ll see. And stay tuned for more information on that. Just keep checking on the podcast. And we’ll tell you about that. We got aboard the plane soon. Yeah, so let’s get over to our gate. 818 I think right here in the airport. Yeah, they’re coming to meet us. Yeah, we’ll be there. And let’s just listen to an interesting audio track from a video I want to share with you. Here it is.

Excerpt from audio track 18:34
Club billionaire Jeff Green has been sounding the alarm for years about the destruction of the American middle class today. He put his money where his mouth is having some of the greatest minds in from academia, the economics world come here to Palm Beach to his conference closing the gap, how to create a more inclusive global economy. Jeff, thanks for joining us. Hello, Robert. This is kind of a new model for a conference where you’re basically spending your own money to address As a single issue, why is it so important?

Excerpt from audio track 19:03
Well, the biggest issue for me for years now has been that the exponential growth of technology and the global legalization of wages has destroyed millions and millions of jobs. And what I have learned preparing for this conference, is that what globalization did to the blue collar worker in manufacturing over a 30 or 40 years, artificial intelligence, machine learning big data, robotics, I believe will do to the white collar workforce in the next five to 10 years. So this is a national emergency, and I’m going to address it myself if no one else will.

Excerpt from audio track 19:33
You’ve often told the story you actually worked as a busboy at the breakers down the street. Now you live in 100 million dollar mansion. This is your hotel, somebody would ask, you have been so successful. Why do you think that system is broken in America? You’re proof that it can work?

Excerpt from audio track 19:48
Well, that’s exactly it. I mean, I have proof that I can work but the system we have today isn’t the system in which I grew up. I grew up in western Massachusetts in the 1960s Robert, it was a working class community. You know, I went to the same public schools or the bricklayers kids and the pediatricians, kids in the doctor in the you know in the Laureus kids. And we all got good solid education’s. There were opportunities for people when they get out to get jobs in factories, good paying jobs, and all my my friends whose parents were bricklayers, and were factory workers, they lived in homes that those families out today, people get out of high school. I have friends whose kids graduate top law schools and can’t get a job for a year or two. So you know, we have to do something about it because the job picture is getting worse and worse.

Excerpt from audio track 20:31
Jeff, let me do Billy if I may. And thanks for joining us here. I just want you to listen to something that Ken moelis told us the other day about the changes he sees in technology that while disruptive or necessarily threatening to our society, take a quick lesson.

Excerpt from audio track 20:46
In our world right now, you have so much technology driving price, transparency, pricing, power, efficiency. These are great things I mean, what Amazon is doing if you’re a retailer, you better take your profit down. Give the consumer an awfully good deal or Amazon’s going to is going to replace you.

Excerpt from audio track 21:05
So in other words, Jeff, a lot of the changes that we’re seeing, even if they create, you know, people in law school who aren’t getting the dream job that they wanted are fundamentally for the for the for the good. He would argue what would you say?

Excerpt from audio track 21:18
Now, it’s a disaster, I mean, commodity, the way prices going to work, we’re going to all have such perfect information. Think about when you buy an airline ticket today, you can go on one of the websites like kayak or Expedia, you’ll know in less than 60 seconds what the very best fairest, that’s going to be how you’re going to buy everything, margins are going to get squeezed, retailers are going to go out of business, we’re going to be you’re going to be able to buy every product not only from here, from everywhere in the country, you know, with with translation, talk content, technology, it’s not going to be long before you’ll be able to print a price every product from every country in the world. Yeah, what’s that gonna do to American profitability?

Excerpt from audio track 21:50
Listen, I hear your point. But Amazon’s worth a pretty penny. Let me just bring out the red pill on here as well. She has a question.

Excerpt from audio track 21:57
Jeff, thanks for joining us. So you have right The question of robots stealing our jobs, of course, which is a concern that has been around for centuries, arguably millennia. I mean, I think Socrates said that one day, some sort of automated system would replace the the weaver. You know, we had Luddites, who were destroying threshers, destroying looms and every time this concern has been raised, mankind has been able to adapt. It was painful initially, but there there wasn’t ability to adapt, we transition from an agrarian society to an industrial society, and so on. Why is today any different? I mean, why why the doomsaying today, given what we’ve seen historically?

Excerpt from audio track 22:40
Well, I mean, look, I mean, you could talk about Amazon. You know, look, I mean, if you want to talk about jobs, just look at the look at the Amazon distribution center. The robots are stocking the shelves. Go take a view to take a look at the video of a Tesla factory. The welders are robots. This is really happening. This is not the Jetsons anymore. It’s not some futuristic story. This is happening today. Let me tell you the other problem is globalization.

Excerpt from audio track 23:03
But it’s, well, you know what the problem now is adapted, you know?

Excerpt from audio track 23:07
Well, it was different. First of all, if we had a relatively closed economy and I was a kid, you know, basically, the economy got good. Everyone bought a whirlpool bad washing machine and then a whirlpool workers went back to work. Now, if you want to watch me saying, you know what that was going to be made somewhere else, because what happens as soon as late wages get high today, they their labor gets replaced, either with a technology solution or labor from from a cheaper country job,

Excerpt from audio track 23:30
I want to ask you about solutions. We all know that this is a problem. The degree of the problem can be debated. But what is one hard concrete solution that has either come from this conference or will come from this conference that you hope can be implemented?

Excerpt from audio track 23:44
Well, that’s a good question. I mean, I have been here all day with some brilliant minds, Robert, and I can say that, you know, I mean, Bob, right. She was the former labor secretary talks about some kind of guaranteed minimum income. I think that a lot of the talk about lifelong education people, right. we’re educating our kids, not In a vocation, which is just anecdotally being talked about as a welder shortage or whatever, but teaching our kids that they have may have 20 jobs in their lifetimes, and they have to learn how to adapt themselves. So we get to get our education system geared. We have retraining programs, we can’t just say that some people, you know, they work in a job, it’s not their fault that that industry gets automated and they lose the job. We have to have a safety net to hold them over until the end, then we have to retrain them and get those that want to work a chance to have another job again.

Excerpt from audio track 24:29
Right. Well, Jeff, thanks for this conference. Bring it together everyone, by the way, from Tony Blair to Mike Tyson talking about the economy. So some interesting ideas to bounce around here. Whether we solve it or not, is the open question Kelly back over to you.

Announcer 24:44
I’ve never really thought of Jason as subversive, but I just found out that’s what Wall Street considers him to be. Really now How is that possible at all? Simple. Wall Street believes that real estate investors are dangerous to their schemes. Because the dirty truth about income property is that it actually works in real life. I know. I mean, how many people do you know not including insiders who created wealth with stocks, bonds and mutual funds? those options are for people who only want to pretend they’re getting ahead. Stocks and other non direct traded assets are a losing game for most people. The typical scenario is you make a little you lose a little and spin your wheels for decades.

Announcer 25:27
That’s because the corporate crooks running the stock and bond investing game will always see to it that they win. This means unless you’re one of them, you will not win. And unluckily for wall street. Jason has a unique ability to make the everyday person understand investing the way it should be. He shows them a world where anything less than a 26% annual return is disappointing. Yep. And that’s why Jason offers a one book set on creating wealth that comes with 20 digital download audios he shows us We can be excited about these scary times and exploit the incredible opportunities this present economy has afforded us. We can pick local markets, untouched by the economic downturn, exploited packaged commodities investing, and achieve exceptional returns safely and securely. I like how he teaches you how to protect the equity in your home before it disappears and how to outsource your debt obligations to the government. And this set of advanced strategies for wealth creation is being offered for only $197. To get your creating wealth encyclopedia book one complete with over 20 hours of audio, go to Jason hartman.com forward slash store. If you want to be able to sit back and collect checks every month, just like a banker. Jason’s creating wealth encyclopedia series is for you.

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In this client case study, Jason Hartman talks to Michelle Hawkins, a client who has attended a Meet the Masters live event and the most recent Creating Wealth Seminar and Property Tour in Cincinnati, Ohio. Michelle shares what has led her to invest in income property and also gives investing advice. They discuss inflation, real interest, and tax rates.

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 0:12
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 1:03
Hey listeners, I just want to apologize for the audio quality on the first part of this show this episode. It is only the first part for just a few minutes during my monologue portion. And then when we have our guests, the sound quality is improved dramatically. So please bear with us. I apologize. We will try to make sure it does not happen again. Welcome listeners from around the world in 164 countries. This is your host Jason Hartman episode number 686 686. Well, I woke to the tragic news this morning, Sunday morning, as many of us did, to the terrorist attack in Orlando, Florida. A 29 year old Islamic radical went in and killed a bunch of people. He was targeted. gays apparently, these are the early stories coming out. We’ll see how this is corrected. We’ll see if this guy had contact with the FBI. We’ll see what his Afghanis ties were apparently he was born in the US, Afghani parents. And maybe most interestingly of all, will we see any coverage about him being on antidepressant pharmaceutical drugs on benzodiazepine type drugs? These mass shooters? That’s the thing they have in common. It’s it’s always the prescription drugs. Yeah, you don’t see this stuff covered. Because look at all those commercials on TV. For those pharmaceutical companies. Yes, I know. Very little coverage. Only the alternative media covers this kind of stuff. And then everybody doubts it because they say, Well, you know, you can’t run away. On what TMZ reported, I don’t know, maybe it’s a lot more reliable than CNN. Maybe someone knows. Did Donald Trump by CNN, either. Here’s the reason I asked. He that’s all they talk about Trump. I mean, it’s mind boggling. You know, I don’t have television. As you may know, I told you that I canceled my television a few years ago. I just have internet access in my house.

And so I watched streaming services and surf around on the computer. But when I go to a hotel, and I’m on my way to a hotel now because I’m on my way to be driven by my self driving car to be driven to San Diego, escape the heat a little bit and that’s a game changer. You know, like I’ve talked about because here I am. It’s going to be 102 degrees in Scottsdale, Arizona today. And it’s going to be 70 degrees in La Jolla, California today. Where are you? Going, and my car will drive me there almost effortlessly. And imagine when that car is completely autonomous, right? I could literally get into the car and go to sleep and go to the much more expensive real estate market that I don’t have to pay to live in. And the car will stop along the way and charge itself or fuel itself automatically. And I don’t even have to wake up the whole time I can be driven there. Five and a half hours, six hour drive. I’ll just wake up in San Diego to a much nicer planet.

Now listen, Arizona eight months of the year, has the best climate on the planet. If you ask me. I love it here. Eight months of the year. It’s spectacular. Literally spectacular. But of course in the summer, it’s tough. It’s It’s hot, but it’s a dry heat. So that self driving car thing will change the game. But I tell you it Back off my tangent. Anytime I go to a hotel, and I turn on the communist news network or the clinton News Network, or the crisis News Network, you know, CNN, CNN has so little credibility anymore. It’s mind boggling, but not with a large percentage of the population. They still do. So I turn it on, and all they are talking about is Trump this Trump that Trump everything else. Donald Trump, Donald Trump does that and the other thing, some stupid thing he said. Did he buy that state? Did he buy cnn did Ted Turner sell cnn to Donald Trump? You just gotta wonder. You just gotta wonder. But yeah, tragedy, another terrorist attack on US soil. And is terrible as this is. I bet there will be a lot more. So be ready. You don’t see this stuff happen in Texas. I wonder if this is ever going to happen to you Texas, is someone going to go into a nightclub in Texas and kill a bunch of people, when all those Texans would just pull out their side arms, because a bunch of them will have them with them and shoot back. He’ll get off a round or two, and then he’ll be dead. So, look, I don’t want to live in the wild west. I live in Arizona, I can certainly carry a gun around anytime I want here. It’s super easy. You know, no permit needed, but I don’t. Or at least I don’t often say that. Just in case you’re you might wonder. But yeah, you know, it’s, it’s tragic. They always pick the places where people aren’t armed. You look at Europe, nobody’s armed. So that’s a prime target. That’s where most of this this kind of stuff happens. It’s really sad. Our world especially the left, the left is the most guilty of this. The folks on the left they are Attack the symptom and never attack the cause. Attack the cause, not the symptom. That’s what you have to really look at. What is the cause? Is it a radical religious ideology? Is it pharmaceutical drugs? Is it immigration control that we need to talk about? I don’t know. You know, what is it? I’d love to hear back from you. In fact, if you want to have an intelligent discussion in you’re an expert on these subjects in some way, come on the show. I’d love to interview Yeah. It’d be interesting to talk about. Okay, so this is a real estate investing show, right? Yeah, it is. But I’m pretty upset about this, as I’m sure many of you are.

So I just thought it was worth a comment and of course, worth some prayers, but much more than that. It’s worth really doing something about on a more political level. So We have to talk about this kind of stuff. But yeah, so let’s talk about a investor journey. Let’s hear from one of our great clients today, who has recently started her journey to build a great real estate portfolio realizing that the pension system will not solve the problem, again, more symptom and cause discussion. These pensions are totally overrated. They’re going to be debased potentially through inflation. It’s a huge concern. So you’ve got to plan and that and create your own security in the world as all any of us can do nowadays. I remember Earl Nightingale talking years ago, about the laid off steel workers in the Rust Belt areas. And he would say, or the auto workers in the Detroit area, you know, he he would You know, someone would stick a microphone and a camera in front of one of these people laid off because the plant shut down or they laid off a bunch of workers. Well, I’ve been doing this 20 years I don’t know anything else. And romaine kills comment would, you could learn how to do heart surgery in your spare time in 20 years. Okay? We have got to take and make our day job, simply the stepping stone to our ultimate goal of building a very nice investment real estate portfolio. I have graduated, if you will, in my own portfolio into some bigger things which are kind of cool and interesting, but they are much more complicated. I still love the humble single family home I just bought a couple more of those myself. I’m going to be buying more as I go down my own path of diversifying I freely admitted one of the mistakes I’ve made is that I’ve over diversified so I’m trying to Be a little less diversified. If I can get myself down to like seven markets, five would be even better, but seven would be great. Lucky Seven, seven different real estate markets between my apartment complex holdings mobile home park, single family home holdings, I would be super happy about that. Again, your mind can remember three to five things really easily. You can keep track of that in your head and really know what’s going on with your portfolio. So don’t over diversify, but do be diversified. Remember, part of the 10 commandments, and then the next 10 commandments. And by the way, we’re going to be playing on some future episodes here. Some recent live recordings where I’ve updated some of this stuff, and I think you’ll enjoy that. I know you’ve told me you’ve enjoyed the past recordings but we’ve, we update this stuff. When we do these live events. There’s a new spin some new details new, distinct on it. We’re also going to analyze a an interesting duplex. With our guests here today, Adele bola Island duplex that’s a Newport Beach, California. See if you like that deal. Let me tell you about some of the other great shows we’ve got coming up. Gosh, we got so many in the can now for a while there we were a little short on inventory. We’re going to be talking about retirement risk and how to plan around uncertainty for a successful retirement. That’ll be with Jamie Hopkins.

We’re going to talk about a heist in the Federal Reserve with Matthew Quirk. Kevin mania is going to be here from Newsweek talking about how to play bigger, how pirates, dreamers and innovators create and dominate markets. We’re going to talk about we got a little more another interview on the Chinese market talking about breaking in ground and Chinese investment in us real estate. Arthur Margolin from Rosen Consulting Group in the Asia Society. We’ve got john our lot coming back which by the way, you No, I opened up talking about the gun control silliness. It really is. It’s just it just doesn’t make intellectual sense. And intellectual honesty is in short supply today, but we’re not going to talk about that it just so happens the author of that great book, more guns less crime, john r lot will be with us to talk about economics, and how do we regain control of our future. He writes for the American Enterprise Institute and Fox News. We’ve got congressman Dr. Paul Brown with us talk about economics and the Constitution, flat tax job growth and more. Yeah, we got some good stuff coming up. So really, some interesting interesting shows a lot more than that. So anyway, let’s get to our guests.

Let’s talk to one of our clients. Michelle, who recently attended our Cincinnati, Ohio market, Cincinnati sort of date meeting between market tour and creating wealth seminar and she’s got some good comments for you on that. Visit Hartman education COMM And check out some of our great educational products there that go into a lot of this stuff in more structured, detailed manner. That’s at Hartman education, COMM And of course properties at Jason hartman.com. And we will be announcing another event soon. We’re working on that now. So stay tuned for that as well on future episodes, and let’s get to our guest and talk to Michelle.

Hey, I wanted to welcome one of our clients to the show, and she’s a newer client, but a longtime listener to the podcast, and that is Michelle from the San Francisco Bay Area. Michelle, how are you?

Michelle Hawkins 13:36
I’m great, Jason, how are you?

Jason Hartman 13:38
Good. Thanks for joining us and you are a musician. So you’ve got a very nice microphone and you sound great. Thank you. This is a totally professional interview here, folks. I’m sure I sound terrible compared to Michelle. So you know, unfortunately, that’s not supposed to I think it’s supposed to be the other way around. But you joined us for our last meet the Masters event last January. And then for our Ohio property tour and creating wealth seminar recently, how’d you like it?

Michelle Hawkins 14:06
I loved it. And I would absolutely recommend it to anyone who’s out there listening. If you’re on the fence, and you’re, you’re wondering if this real estate investing is for real, I just would recommend that you go to an event because you’ll meet people. And you’ll, you’ll see that there are real people who are actually doing it and that it’s not a scam. It’s actually a real thing. And it works. And, and there’s a lot of people out there doing it and doing very well.

Jason Hartman 14:37
Yeah, thanks for mentioning that. I really want to encourage listeners to come to events, at least come to one so you’ll get to meet us and know what we’re all about and meet our clients. It would be much easier Michelle and everybody listening for us to just be sort of this online business right? Where we didn’t do live events. Live Events are lost. splitter for us they don’t they’re not profitable by the time you make it all happen and promote it and so forth. But they are profitable for us in the sense that once people come to events and meet other more than more important than meeting me or our team of investment counselors and our staff whoever happens to be at that event, it’s meeting the actual people the other listeners to the show the other clients hearing their stories and the good and the bad and the ugly it’s not all roses by any means. And I don’t know Michelle either they are those the only two events Ubuntu masters and then this last Ohio property tour.

Michelle Hawkins 15:40
Yes, yeah, Masters was my first event.

Jason Hartman 15:42
Did you hear any horror stories?

Michelle Hawkins 15:44
Not at masters No, but, but I did meet a lot of really wonderful and interesting people and got to hear you know, where they were in their investment journey. And it just really gave me confidence to actually pull the trigger.

Michelle Hawkins 16:01
Because, you know, it’s scary,

Jason Hartman 16:03
you know. And you’re you’re sort of the typical kind of investor that we have, I’d say, I’d say the largest section of our clients are people that are in your similar situation. They’ve got a home, it’s appreciated. They’ve got a lot of equity in it as Do you. It’s that old concept. We used to have this ad It was a great looking at, I wish I could find the image we hired an illustrator to make it and everything in it. It was when really the vast majority of our clients were from California, because that’s, that’s where I started out. It said, turn your castle, meaning your home into a kingdom. And it had and the idea was harvest the equity from your highly appreciated home or your paid down mortgage that you’ve been sitting on for years, either one and diversify it around the country into these much more sensible, stable linear markets. So you have the best of both worlds. You still control that asset, you still own it, you know, just refi that money out and buy some other income properties that makes sense that actually work. You wanted to talk about that, and pensions and so forth. And I love how you say, because as we were off air, before we started, you talked about this, this whole idea that is so ingrained in society. And of course, it’s ingrained, because Wall Street has lobbied Congress, and they’ve had laws passed. I don’t know how much of they were behind irisa, but probably a lot back in the 70s. And they’ve been promoting these ideas for four decades of that we’ve got to sock all our money away in the stock market, rather than use it today. And I think you could use it in a much better fashion, and wait till you’re 59 and a half or 70. To enjoy it. What did you say about that? share that with the listeners, I thought that was a really good thought.

Michelle Hawkins 17:57
Well, it’s just this idea that your hard earned money doesn’t really belong to you. And that the government’s basically saying, you know, oh, we’ll let you put your money away so that you can have it when you’re 70. Right, rather than, like, as if that money doesn’t belong to you in the first place that you didn’t earn it. Right? So why should you be able to enjoy it during the prime of your life? Right when you have, you know, the energy and vitality to travel the world or do whatever you want to do. But instead, they’re saying no, you know, you should really just stick that away where you can’t touch it without great penalties. And, and we’ll just let you have some of it when you’re 70.

Jason Hartman 18:37
But isn’t that a good idea, though? I’ll just play devil’s advocate with you for a moment. The government encourages people to save money for their future rather than the government taking more in taxes and then promising to give it back to us later when we don’t have an income right or what I mean, where’s the Where do you come down on that?

Michelle Hawkins 18:58
Well, That’s sort of nanny state ism, right? It’s the idea that you are not intelligent enough to do something good with your money. Or, you know, if you if you want to do something more aggressive or something more clever with your money, you know that they don’t encourage that, right? They just encourage you to do the simple, safe, boring, and actually, really, not really not effective thing with your money. I mean, the reason why I’m here, Jason is because I did the math. You know, you know, when I first when I finally got this tenure track position, and I was in a place where I could really step back and look at a bigger financial picture of my life. I was curious, you know, where am I going to be at retirement? And I looked at my pension, and I did a bunch of projections. And when you take into account inflation, it’s not pretty, it’s not what people think it’s going to be. And then I looked at, you know, socking away the max is Look, you know, four, three B and in a, an IRA Roth or, or normal. And you add all that up you, you know, say maybe the stock market is going to do a percent. And then you take into account inflation and the fact that that money will be taxed at income as

Jason Hartman 20:18
income, right when you withdraw it and, and, and look, nobody listening would be dumb enough to think that tax rates will be lower. Because Because Michelle, here’s the thing, like, the way I heard that pitch to me many years ago is, is that look, when you retire, you’re going to be in a lower tax bracket. And I’m thinking what the that on its face is such a messed up idea. The idea is that I’m going to retire and be poorer than I am now. I hope I’m going to be a lot richer than I am today when I retire. Yeah, so just that part of it first is wrong. But also the fact that the government is so dysfunctional, and so broke The idea that tax rates will actually be lower. Yeah. You know, based under I mean, the thing they’re saying is that under the current tax scheme, that, yes, if you’re making a lot of money today in the prime of your career, and you’re working hard, and you’re in their peak earning years, and then when you retire, you live more modestly. Which who wants that idea? Right? But whatever. We’ll take that on its face and let it go. And your income will be lower. So your tax bracket will be lower? Well, yeah. But first of all, the tax scheme doesn’t it’s not a it’s a dynamic thing. And as the government gets more broke, they tax more. So that’s the first problem with that theory. And then the second problem is who wants to be poor in the future?

Michelle Hawkins 21:47

Jason Hartman 21:48
Crazy. It makes no sense. Yeah. So if you do, let’s talk about that math you did for for a minute. So if the s&p does 8%, for example,

Michelle Hawkins 21:58
I don’t know. Do you think it’s gonna do a percent and the foreseeable it’s so overvalued, currently slated due to random printing? I don’t know.

Jason Hartman 22:07
Right, of course, but that that’s a complex discussion to have. But if we say if we say someone listening is 30 years old right now, and for the next three decades, do you think the s&p will average 8%? God? I don’t know. But let’s just give them that. Let’s say it does average 8%. Okay, sure. And let’s say that real, I’m not talking about fake manipulated inflation rates, but real inflation over that same course of time. Okay. Now, you know, Michelle, that when I presented the inflation induced death destruction concept, last weekend in Ohio, at the creating wealth seminar, inflation from 1972 to 2001, in that 30 year mortgage period, any one of the millions of people that had three decades long mortgages at fixed rates back then inflation averaged 5.3%. In official numbers, this is not this is what the government told us it was, which is always they’re estimating lower. Okay, the CPI said 5.3%. And I think you can assume that whatever the official number is, you can conservatively add 50% to that. Okay, no, argue with me if you want maybe, you know, some people would say you can make a double that if the government said it was 5.3, on average, that it was 10.6. I’m not going that far.

Michelle Hawkins 23:36
The fact that they don’t, they don’t take into account energy, which everyone uses and has to use, you don’t have a choice, right? And food. Right? You know, all you have to do is be the person who drives and go shopping in your household. And you know that it’s all a lie,

Jason Hartman 23:52
right? But the distinction is though that’s in the core rate of inflation, that’s not the CPI. Okay, so in the CPI, they do count that stuff. But they

Michelle Hawkins 24:00
manipulate the hell out. Yeah, they don’t it’s not real.

Jason Hartman 24:03
It’s not real. Of course, it’s not real. We know that for sure. You know, any sophisticated person knows the government is lying about they’re manipulating the inflation rate massively. So let’s just say that over the next three decades, the s&p does 8% in real inflation is seven and a half percent. Okay, seven and a half. We’re, you know, assume it’s slower, say it’s 5%.

Michelle Hawkins 24:30
I did 4% and was still horrified right? Well, yeah.

Jason Hartman 24:33
Okay. And did you do 8%? On the s&p?

Michelle Hawkins 24:35
Yes. Okay. And I’ve just plugged it into some, you know, there’s some great online calculators you can find, yeah, so I just plugged in all these different scenarios and was shocked.

Jason Hartman 24:45
Okay, so here’s why Michelle is shocked. I think, Okay, I’m gonna just tell me if I’m wrong. You were shocked because it’s 4% inflation and 8% return on your funds in the s&p. Then you’re going to get taxed either. If you convert that into a Roth, you’re going to get taxed immediately or later, you’re going to get taxed when you start to withdraw, and the tax rate will probably be much higher. But look, you live in my former home state, the Socialist Republic of California, and I love what you say you say, it’s lonely being a libertarian in San Francisco.

Michelle Hawkins 25:22
It really is. And it’s, it’s shocking, because you would think, you know, with all the supposedly free thinkers that, you know, these ideas would have more traction out here, but well, you know,

Michelle Hawkins 25:34
it is what it is. Yeah. Right.

Jason Hartman 25:35
That’s, that’s, that’s very true. So your, your tax rate is probably going to be somewhere in the neighborhood of 40 to 45% when you include this, right, yeah. And then there are a bunch of other taxes we won’t even talk about. So you’re gonna pay, just just route it. So you’re going to pay 40% of that. You’re hardly making any gains. You’re not making any Yeah, yeah, you just treading water, right? You you you have inflation at 4% you have return at 8%. And and then you pay 40% in taxes. When you take withdrawals and distributions later. It the whole thing does it just doesn’t work. You’re absolutely right. It doesn’t work. So, so that’s what attracted you to real estate investing, right?

Michelle Hawkins 26:24
Well, when I realized that I just, you know, said, well, there, there just has to be another solution. So, I just, you know, I literally went to the library and checked out every book I could find on investing, you know, stocks and real estate and I, I just looked up every podcast I could find and just started learning, learning learning. And I stumbled across yours and just kept coming back to it over and over again. And really started thinking about it and learning about it and it’s, it’s the only way

Jason Hartman 26:55
you know, what books did you look at and read and any recommendations good, bad, ugly. Big nerds like to hear about that if you remember which ones,

Michelle Hawkins 27:03
the ones that I ended up liking the best.

Jason Hartman 27:05
Yeah, the ones that you didn’t like or you do.

Michelle Hawkins 27:08
You know, I started out, you know, looking at stocks. So of course I, you know, there’s do the Intelligent Investor, right famous, famous one that supposedly it’s Warren Buffett’s book, or the one that influenced him value investing. So I was trying to figure out, you know, what’s all this value investing? And I read Tom Vogel or vocal, what’s the vanguard guy Bogle? I think Google the little the little book of investing group. And basically, the more I learned about it, the more I learned that you cannot beat the index, right? That’s sort of the common wisdom now

Jason Hartman 27:42
that’s the random walk down. Very famous book. Yeah.

Michelle Hawkins 27:46
And you know, you can’t you can’t beat the index. So that’s the best you can do is find a no load index fund.

Jason Hartman 27:52
Right, Vanguard. If you’re gonna be in stocks, I don’t totally disagree with that. I just thinking you’re in the wrong thing if you’re in stocks, so. But conceptually, I think that’s what’s hilarious about all these people spinning their wheels on Wall Street. They all think they’re gonna beat the index. They’re gonna beat the high frequency traders. They’re gonna beat the professionals that live, eat and breathe this stuff. It’s all they do. It’s their whole life, and they can’t beat the indexes. It’s it’s like, it’s hilarious.

Michelle Hawkins 28:26
The hedge fund managers, that’s

Michelle Hawkins 28:28
what I’m saying, Yeah. Hey,

Michelle Hawkins 28:30
Warren Buffett’s gonna win his bet.

Jason Hartman 28:32
That’s what I’m saying. It’s hilarious that people actually can talk about this stuff with a straight face. It’s just mind boggling to me. Yeah. So you came to the conclusion after all of that stuff that that real estate was the thing do you have a second best favor for real estate? Oh, gosh, after real estate,

Michelle Hawkins 28:54
Oh, you mean for investing or for books?

Jason Hartman 28:56
for investing or books, either one. I was talking about investing when I The question.

Michelle Hawkins 29:01
I mean, of course, there’s Rich Dad Poor Dad is the classic read that many years ago. And then there’s just, there’s so many on real estate investing. And I am drawing a blank. William William Nickerson. Oh that’s great.

Jason Hartman 29:15
That’s a classical stuff. Bill Nickerson, William Nickerson, he I think he started writing books about it in the 50s. Oh, no, he was before then. Yeah, it was like late 50s. Or at least his story started in the late 50s. I one or the other. It’s a great story. He’s got one I think is really famous one is called how I turned $1,000 into a million dollars in my spare time in real estate, some crazy things. Yes. And my guy was legit, you know, he did the real thing. But keep in mind that he was doing that in a different environment. There was a lot of inflation that he benefited from during some periods of his investing career. So that was a that was part of it. But yeah, his stuffs great. It’s just you have to add a zero to everything. That’s all. I remember when I was hearing a synopsis on an on an audio book of his story, and the narrator said, and he bought his first property for, wait for it. And it was like $7,000. And it was in Redondo Beach. I think Elena. I’m kidding. I don’t know where it was. But it was in some high end area, sort of. And it’s funny story. Bill Nickerson is great. He’s he’s, he was one of the he was really one of the first I think, to contrast that you want to hear about an amazing deal. Michelle, tell me what you think of this deal. Now that you are an educated investor, I got one in my former hometown, Orange County, California. This is on this is in this really charming area called Balboa Island. Okay. Okay. You might be looking at this because I showed you where it was in that Facebook group. This problem is a duplex on Balboa Island. I wonder what the listeners are gonna think of this deal. You know, if you’re interested, contact us, we can we can help you buy this property, okay because you know we are a California licensed company. Okay. So So here you go, you’re ready the price? Well, before I tell you the price, let me tell you some other stuff about it. It’s two units. Okay. So the total size of the building for both units is 40 579 square feet. And the price per day was built back in 1976, two stories. So 100% occupied, both sides are occupied, and the price per unit. This will give away the overall price obviously, is $1,750,000 per unit. So it’s three and a half million for the duplex and the gross rent multiplier. We really never talked about this one as a metric, but it’s so mind boggling that I I thought I’d share it. It’s 54.01 is the gross rent multiplier. And that gives you a cap rate of, like they said in the William Nickerson book, wait for it. Point, five 6% cap rate. point five, six. Now all of you listeners who understand this or you’ve gone to Jason hartman.com and click on Properties and looked at the performance, you will see cap rates anywhere from probably seven to 12% in that range, okay. And most of them will be around eight, or 9%. Yeah, something in there. Right. So this cap rate is point. It’s not even it doesn’t even have one. It’s less than one. Okay, it’s point six, five or five 6%. I cannot believe how terrible the steel

Michelle Hawkins 32:50
but it’s in California.

Jason Hartman 32:51
Oh, yeah, that’s right. That must be golden land. Oh, yes. Yes. Magical golden. Love it. Yeah. So here Here’s the the the income on this property is $64,800 and the operating expenses are $43,427 leaving in and oh I have a net operating income up look if you invest three and a half million dollars, this is going to be your noi your net operating income. It’s going to be 19,430 bucks.

Michelle Hawkins 33:31
Sign me up, Jason.

Jason Hartman 33:33
Yeah, but here’s the funny thing. Lots of people will buy this kind of thing all day long. I mean, maybe not quite as bad as this one. But lots of beachfront duplexes and, and this isn’t even on the beach front. By the way, I know what street This is on. I’m very familiar with it. A lot of these you know beach area properties sell for these reduced Oculus, they’re just terrible deals. And look, you live in the San Francisco Bay Area. I mean, you got this kind of stuff all over the place. In fact, if we if we did the same type of analysis on the house in which you live, because you told me about it, I bet it’s not too far from this one, you know, in terms of the cost by versus the income it would produce, you know? Yeah, it’s amazing. And all these people that buy this stuff actually call themselves investors. It’s hilarious.

Michelle Hawkins 34:32
Well, are they just looking for a place to store their money in dollars? Right,

Jason Hartman 34:37
a lot of that a lot of those are Chinese buyers, right?

Michelle Hawkins 34:40
They just want to buy or store for their money. They don’t even care so

Jason Hartman 34:44
so. Yeah, that’s kind of true. I mean, think, yeah, that’s a good point. In a world of negative interest rates are in some places. You literally have to pay the bank to hold your money. And if it’s here in the US, you barely get paid for Bank to give you money. I opened up a couple of accounts at another bank just to be under the standard, the FDIC limit great problem to have. I love that problem. But and they, I actually got a thank you note, I couldn’t believe when I After opening the account and I think it’s because the woman like my dog so much, but I don’t know. They used to give you gifts like toasters and stuff when you open bank accounts, but not anymore. It’s like, it’s like they’re doing you a favor for keeping your money. I guess that’s the way you can look at this property. Yeah, that’s about what it is. But it does have a corner lot. Well said. So there you go. There you go. Unbelievable. What else should we talk about anything? Yeah. How about more of the Do you want to talk any more about the fears of doing this and that type of thing, Michelle,

Michelle Hawkins 35:53
I’m sure.

Jason Hartman 35:55
I mean, some of the concerns you’ve had and some of the things that have gone through your mind well

Michelle Hawkins 36:00
You know, that’s, I’m sure it’s similar to what a lot of people are thinking like, well, what what if the tenants destroy the place? Or what if they don’t pay, you know, vacancy and all of these things, and that definitely is a concern. And so that’s why I decided to come to some events because I wanted to be able to just vet the entire process. That’s what’s great about me, the Masters is that you meet a lot of different providers. And, you know, you can kind of get a sense from their presentation as to how organized they are. But then beyond that, I actually saw my first properties in Memphis. And so I actually went to Memphis for a day, and it’s worth it, it’s worth the plane ticket, to go there for a day just to see the operation, and know that it’s real, right? The properties are real, the company is legitimate. You meet the people that you’re going to be working with virtually, you know, moving forward. And so that’s a great idea. You know if that’s not one of our events, but go and meet with our providers in one of our markets have a you know, just fly out there and have them drive you around and show you their operation their properties, go see their office, meet their staff meet their team. This stuff’s real. Mm hmm. And I can tell you from Cincinnati that we were just blown away with the provider there. She’s awesome. And, and I think she sold a lot of properties just based on just what a fantastic businesswoman she is.

Jason Hartman 37:31
Yeah, she really is. She’s, she’s very good. Very good. She does a great job. No question about it, you know, other operators in other markets, they they do a great job, too. Maybe not as nice and event is that one, but they they run fantastic businesses, like I just bought two more properties in Memphis. And last year, I bought another two properties in Memphis from a different provider we have there. So we have a couple different local market specialists and now I’ve purchased Two from each in the last year and a half. It’s interesting, they both do a great job in a different way. They have different personalities and different ways of doing things. And that’s part of that whole embrace the fragmentation concept. But yeah, phenomenal. And I was really pleased that I got properties is good as I did. Because I gotta tell you, I was in fear that that wouldn’t happen given the dwindling inventory challenge.

Michelle Hawkins 38:27
You know, I’ll tell you what, what surprised me when I started doing this. When when I was actually shopping and was going to pull the trigger was that it’s actually competitive, right? You You do need to be able to make up your mind very quickly, because if you don’t, someone else will. And actually, that actually gives me some pause because it makes me think well are you know, why is everyone in such a hurry? Or why aren’t people taking a little bit longer to do their due diligence, but I think once you get to a certain point in your investing, you don’t Need to? You know, you just know?

Jason Hartman 39:02
Well, yeah, it’s the first time is the hardest. And after that you just kind of get a sense of it. And it’s really not that big a deal. But yeah, you know, you just know, and you might miss a couple of properties and lose them and just try not to get too discouraged. And then, you know, another one will come along. That’s really all you can say. But yeah, yeah, good stuff. Well, hey, this has been great having you share some of your experience and some of your thoughts on the show. Michelle, thank you so much for doing that. Do you have any particular plans or goals for your investing? I know you’re, you’re kind of a planner. So I thought I’d ask you that question.

Michelle Hawkins 39:40
Well, we’re in the process of doing a cashout refi on the house. And oh, good idea. Good idea. Yep, got a great rate, it’s locked in. So just waiting for that to close and then I’m going to go shopping for some properties I’m hoping to, to get my first 10 loans done this year. And then after that, we can do another They’re 10 for my husband. So,

Jason Hartman 40:01
yeah, yeah, that’s great. But you can do 10 loans each and you’re both working Yes, with great jobs by the way. And so that that’s a that’s a perfect plan 10 loans each and hopefully that’ll loosen up in the future to where you can even do more loans. You know, what seems so crazy to me is that, really if you think about it from a lender’s perspective, they should feel more secure making loans on sensible prudent income properties to borrowers than they should about loaning people money on their own home, because on their own home, they have no income. That you know, that’s just a completely risky deal. If you ask me. If people get laid off from their job or get into financial trouble one way or another, their own home is the hardest one to support because it doesn’t have the income the investment properties. There you the tenant is paying the depth for you now, not not with that duplex on Bobo Island mind you. Not even was, but on sensible ones it is right? Yeah. Yes, absolutely. So 10 loans each and then onward and upward from there maybe even more, right?

Michelle Hawkins 41:09
Oh, definitely. Yeah. No, the goal is to, I don’t know, 4050 something like,

Jason Hartman 41:15
past a good job.

Michelle Hawkins 41:16
I don’t want to retire to the State Teachers pension.

Jason Hartman 41:21
Yeah. That you’re not into that you don’t think that’s a good deal?

Michelle Hawkins 41:24
I don’t know. It’s that it’s gonna be there. Well, I mean, it you know, who knows?

Jason Hartman 41:29
That’s a, that’s a very valid concern. I think people in Chicago or Illinois in general, are feeling that and in California, I think there’s good, good cause to think that too, you know, there’s no security you got to make your own security in the world, especially nowadays. So do that. And do that by planning and acting and not relying on the government or anybody else for your security. Good. Michelle, thank you so much for sharing this today. I appreciate it. And happy investing. You sure Thank you for having me.

Michelle Hawkins 42:03
I’ve never really thought of Jason as subversive. But I just found out that’s what Wall Street considers him to be. Really now, how is that possible at all? Simple. Wall Street believes that real estate investors are dangerous to their schemes? Because the dirty truth about income property is that it actually works in real life. I know. I mean, how many people do you know not including insiders who created wealth with stocks, bonds and mutual funds? those options are for people who only want to pretend they’re getting ahead. Stocks and other non direct traded assets are a losing game for most people. The typical scenario is you make a little you lose a little and spin your wheels for decades. That’s because the corporate crooks running the stock and bond investing game will always see to it that they win. This means unless you’re one of them, you will not win. And unluckily for Wallstreet Jason has a unique ability To make the everyday person understand investing the way it should be, he shows them a world where anything less than a 26% annual return is disappointing. Yep. And that’s why Jason offers a one book set on creating wealth that comes with 20 digital download audios. He shows us how we can be excited about these scary times and exploit the incredible opportunities this present economy has afforded us. We can pick local markets, untouched by the economic downturn, exploit packaged commodities investing and achieve exceptional returns safely and securely. I like how he teaches you how to protect the equity in your home before it disappears and how to outsource your debt obligations to the government. And this set of advanced strategies for wealth creation is being offered for only $197 to get your creating wealth encyclopedia book one complete with over 20 hours of audio go to Jason hartman.com forward slash store You want to be able to sit back and collect checks every month. Just like a banker. Jason’s creating wealth encyclopedia series is for you.

This show is produced by the Hartman media company All rights reserved for distribution or publication rights and media interviews, please visit www dot Hartman media.com or email media at Hartman media.com. Nothing on this show should be considered specific personal or professional advice. Please consult an appropriate tax legal real estate or business professional for individualized advice. opinions of guests are their own and the host is acting on behalf of Platinum properties, investor network, Inc. exclusively.


Brittney joins Jason Hartman to talk about Port Richey and the Greater Tampa areas as new real-estate markets in Florida. Jason also shares going to Jekyll Island, Georgia, the Federal Reserve’s birthplace, and how it brings to mind that Central Banks control governments around the world. Jason and Brittney also discuss the concept of investing, which is to plan for the future today and delay gratification to save capital.

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 complete solution. For real estate investors,

Jason Hartman 1:03
Greetings from sunny South Florida. I am coming to you today from South Beach, Florida, Miami area. And this is your host, Jason Hartman. And I want to welcome all of our listeners from 164 countries around the world. Thank you so much for joining us today. And we’re going to talk about several things of importance. But one is how you can win a nice little contest we’re having, and it’s super easy, and we have a lot of winners. So here with me to explain the contest is Brittany, you’ve heard her on the show before Brittany, how are you?

Brittney 1:36
Hi, good, Jason. Glad to be on.

Jason Hartman 1:39
Welcome. Welcome. Hey, how long have we been working together? Brittany? I can’t believe you’re still putting.

Brittney 1:47
Yeah, no, I enjoy it. It is Gosh, going on seven years. It’ll be in August. Oh, no. Eight years. I think 2008 right. Yes. Is it 2016 is 2016

Jason Hartman 2:01
Oh, yeah, my math isn’t good at all. No, you know what my I tell you something my mom taught me a long time ago when I was first getting into real estate, even though I kind of got her into real estate, but she started six months before I did. She taught me to always use the calculator. And I think that has impaired my thinking. Sure, yeah. Because you always have this crutch, you know. So whenever I want to add like, one plus one, I just pull out my handy HP 12 c financial calculator, and I put one plus one. And in the information age, one plus one doesn’t always equal to you know what it equals? What’s that? 11 Oh, yeah, exponential. We live in an exponential world, where it is an amazing time to be alive. And less amazingly, we have this cool little contest, so why don’t you tell our listeners about it?

Brittney 2:52
Sure. We have three different ways you can win. You can win a pair of tickets to the Cincinnati property tour, plus creating wealth. Education for the weekend that includes the bus tour and includes your meals for the weekend. And it includes educational conference as well. And we have six winners that will draw for that you can also win a Jason Hartman University annual membership, which will draw six winners for that as well. And our grand prize is all expenses paid trip to the property tour for the weekend, that includes airfare, as well as the tickets for the weekend. So I believe I did the math on this and it was over 1100 dollars, you’ll be saving. So you will get a $500 travel allowance which will cover your flights. And you know, depending so

Jason Hartman 3:49
if you’re if you’re coming from Europe or Japan, or something like that, this probably won’t quite do it, but it’ll be an allowance toward your airfare, you know, so just just a little taste claimer there clarification. Yeah,

Brittney 4:01
yes. And we will choose one winner for that. So the winner, they will have that travel allowance to use towards their ticket or their ticket plus a guest if they want to bring a guest as well.

Jason Hartman 4:12
Okay, so here are the questions. Of course, I’m going to say what do you need to do to enter the contest? It’s pretty darn easy, but also a question in on the minds of many listeners, because we’ve had, I think about three dozen people sign up for the tour already. And the creating wealth seminar. It’s a combined weekend. It’s a weekend event with the seminar and the tour woven through the weekend. So you get to you get the education, and you get to see actual properties. And by the way, listeners, I’ve got to tell you, this is what is this is one of the things that really differentiates us from all of these other I hate to say a bit cheesy and sometimes less than reputable real estate gurus out there. Maybe more than just sometimes is that we have to actually put our money where our mouth is because all of the education that we give you at our events, we actually are in the real estate business, unlike most of these gurus out there, so we’re actually going to provide properties that you can actually buy. So what we talked about and what we show you on the performance for properties, we have to make that come true in real life by providing actual inventory that you can buy as investment property. And let me tell you, that is not an easy task. So that’s a big differentiator. And so, Brittany, you can tell us how you can win, but also the common question among so many of our listeners. So you know, about three dozen people out there have already signed up for the tour. What if you know, the question is going to be, can I enter and can I potentially win the contest? Even if I already bought tickets for the tour?

Brittney 5:49
Sure. That’s a great question. So how you enter is first of all, I want to say this go to Jason hartman.com slash contest. And you can enter there. Yes. If you have already registered for the tour and you end up winning Of course, we will refund your tickets. And if you’re the grand prize winner, then we’ll refund your tickets plus you get that all expenses paid travel allowance as well.

Brittney 6:14

Jason Hartman 6:15
okay, there’s a short there’s three different ways that you can enter. And of course, you can just do one or you can do all three that if you do all three, it betters your chances to win. And Jason, should we say you have to do all three to win the grand prize? Um, well, we should say that stipulation. I don’t, I think it’s just it’s a point system, right? So they get more points if they do more things. And if someone wants to win the grand prize, and they did all those things, then you know, you’re not gonna win the grand prize because you didn’t get as many points. Right.

Brittney 6:48
All right, Jason’s making it easy on you. Because many of us Yeah, sure. Yes. Like Jason saying it explains when you see the contest and enter at Jason hartman.com slash contest. There’s three different ways to gain points you follow at Jason Hartman ROI on Twitter, you give a tweet about the contest or about Jason Hartman. And then you give us a review and subscribe to the creating wealth podcast on iTunes. Brittany, I gotta tell you,

Jason Hartman 7:17
I’m getting so proud of myself. I’m actually using Twitter for the first time in years. Yeah, you know, I sometimes folks, I’m a little late to the party. And this is one of those times you set up a Twitter account many years ago, Brittany, I’m gonna say you did that and maybe 2009 or something. And I just never really was to engage with Twitter. I never wrap my head around how it works. And I’m starting to come around. I don’t quite totally get it yet. But I’ve been I’ve been really sending some of my own tweets, you know, and it’s kind of nice. And I’ve got a I’ve got to do some tweets about the the trip. You know, Twitter is a pretty powerful thing. And I gotta tell you, the only social media program I’ve really ever related to so far is Facebook. Some people are now calling it fake book. I’m really, I’m shame on fake fake book. They’re suppressing the news. And I just recently read an article about how it’s really time to start worrying about Facebook because they’ve got a political agenda. And they’re influencing the election. And they’re influencing votes. And they’re, they’re only showing the news they want you to see. You know, I hope you know, this scandal broke last week about a Facebook employee who said that they were regularly told to suppress certain news, especially conservative political news, in the news feeds and promote news that makes the right the political right look bad. This is just disgusting. It doesn’t matter what side of the aisle you’re on. I think it was Voltaire who had this great quote, he said, I may disagree with what you say. But I will defend fervently you’re right to say it and you know, I tell you something No matter what side of the aisle you’re on politically or in any issue, it doesn’t matter. I mean, a lot of issues are certainly political. But on any issue, you had better be for free speech. Because if you are not, the next time it comes around, it could be your speech that’s getting suppressed. So you better just buy into the idea of this with all of its good and bad. I think it’s just super important. Now, I get the sense that we’re going off on a tangent.

Brittney 9:31
I do that is very unfortunate, like any mainstream media, you know, it’s it’s getting manipulated, and that’s that sad, I agree. But back to the contest, and I did want to mention one thing about Twitter as well and the way that they can utilize it being the listeners is just talking to you directly. Jason, as you’re on these trips, and you’re making these tweets. You know, this is in real time you tweet that message and it will come right away. And you can see where Jason is. make recommendations for him to either stop in eat at a cool restaurant, which I know he would love and appreciate or a cool coffee shop. Or, you know, Hey, I know this provider in the area that has great income properties, will you check them out for me? You know, those things Jason could just jump on he’s, you know, pretty good at planning ahead, but also being spontaneous all at the same time. So please reach out to him if you have any questions. Of course, the The great thing about Twitter’s are short, sweet and to the point, right, so Jason can reply right there or he can answer those on the podcast.

Jason Hartman 10:34
Absolutely. And, you know, Brittany, that leads really to the next thing now that you know, I’ve just Fakebook. Okay. And some people are calling a Mark Zuckerberg. I’m sure you’ve heard that, you know, take the Zuckerberg and put an F in front of it. It’s a whole different word. But yeah, I just think that’s really disgusting. So hopefully we won’t have to worry about that. But let me let’s talk a little bit about my travels. Because I have been traveling for almost two weeks now I’m now in South Beach, Miami, Florida area. And this trip started with me landing almost a week and a half ago really, or Yeah, a little over a week and a half ago, I guess, in Jacksonville, Florida, going on a little VIP mini property tour for a few of our venture Alliance members. And then we we did a little caravan up to Jekyll Island, Georgia, of course the birthplace of the Federal Reserve. And we stayed at the exact same hotel resort that the creators of the Federal Reserve state at it’s called the Jekyll Island club, and our hotel and club and it was What a gorgeous place, Jekyll Island union. You know, you can see why the ultra rich who aimed to control the world and then that did end up controlling the world through the Federal Reserve and through the central banking cartel. You can see why they would choose Jekyll Island. I mean, it was just It was just gorgeous. Okay. And the hotel where we stayed, you know, it’s certainly old. I mean, the Federal Reserve was created over 100 years ago and, and it was there back then. And it’s funny, because when we started our meeting on Saturday morning, we had our meeting in what is called the Federal Reserve room. Literally, on the door, there’s a brass plaque that says Federal Reserve room and outside it said venture Alliance meeting in the Federal Reserve room and take a picture that oh, I knew you’d say,

Brittney 12:33

Jason Hartman 12:34
I think maybe one of our one of our venture Alliance members took that picture I sure hope they did. Why did not take that picture, unfortunately. But I mean, it was just really, really funny being there. And of course, they don’t hide the history of it. Because one they have all these great old pictures on the wall. They have the big picture above the fireplace in the room had a I think it had a fireplace. Yeah, yeah. See? Observing I can be, I could not be a detective, I’d miss a lot of things. There was a big picture there that was there. I think it was above a fireplace, if I’m not mistaken. It had pictures of all the men who met there, okay. And it had a little biography of them. But then one of the other pictures on the other wall had a picture of the resort. And it had a picture of the building, either under construction or after it was just built, you know, these are all black and white pictures, of course. And it said that the original cost of the building was $45,000. And so, our venture Alliance members and all of you podcast listeners as well being so attuned to this kind of stuff, I mean, I thought I was going to be the Brainiac of the group and just pull out my inflation calculator and adjust that for inflation to you know, the current day and see what it would cost today. Right. And someone already did it. I just thought that was so funny, how attuned we are to understanding Really the greatest scam ever perpetrated on humanity, which is central banking and monetary policy and, and the way you know what, why in the world should the value of our savings, our stocks, our bonds, our equity and real estate and thankfully, in a way, our debt be controlled by some small pseudo governmental private corporation called the Federal Reserve. And whether it be the European Central Bank, or all any central bank around the world for any country, they control the wealth of the population. That that’s just crazy that that should be that way. But that’s the way it is. And so it was a fascinating trip. I mean, it was really fascinating and what just it was just gorgeous. We took a ride and a horse drawn carriage and in one of our members, Mike, he’s a Russian guy who’s in the hard money lending business and He brought along this bottle of Beluga vodka and the bottle is gorgeous in and of itself and, you know came in this blender case a

Brittney 15:08
picture that Oh, yeah, yeah, I took a picture of priorities right some pictures. Yeah.

Jason Hartman 15:13
And so we’re drinking vodka is we’re being pulled by a horse drawn carriage and talking and we’re, you know, the guide is touring us around Jekyll Island and showing us well this is where that happened and this is and and either I or one of the other members Chris and his dad Don stayed it literally Elizabeth, who’s one of our members figured this out. We actually stayed in JP Morgan’s condo. We like slept in the same exact room. Okay, one of one of our rooms was probably his condo from what she could tell. It’s just fascinating. I mean that that was were such an incredibly powerful entity was created. And of course, you all listen to all of you regular listeners, listen to G. Edward Griffin talking about On the show and he of course wrote the great book The creature from Jekyll Island So, so that was absolutely fascinating It was a lot of fun and then we met we met on Sunday again you know we have meetings both days and then one of the my favorite times that was Sunday afternoon when Neil and Elizabeth pulled up some Adirondack chairs under this big beautiful tree and we just all sat there not all of us were still there a couple of people left to catch flights and stuff but it was awesome just sitting there under this tree talking we were doing some hot seats and talking about stuff and and of course you know we were drinking beer and it was we’re just having a great time it was so so relaxing I I rarely do that in my life. I don’t know you know hopefully you do it well as a new mom you probably don’t do that too much but not

Brittney 16:47
too much in the expecting part probably limits limits the drinking as well.

Jason Hartman 16:51
Yes. Well that did it hopefully you’re not either and I know you haven’t given up smoking. Gosh, yeah, of course. Yeah. You know, you know what I realized, by the way, I got a comment. So I’m here in South Beach, Florida. And I’ve been here many times. And I just realized every time I come here, how much I sort of don’t like this place. It’s First of all, it’s massively expensive South Beach. And of course, we got to talk about the rest of my tour through Florida and the income properties and so forth. But South Beach, must think it’s New York City somehow, because the prices are exorbitant here, you know, the food and drink and hotels. It’s just very expensive here, and I’m here for a conference. I’m going to be speaking twice at this conference that starts tomorrow. And it’s a conference about single family home investing. I’m speaking on property management. And then I’m also speaking on demographics. One of my favorite topics. Of course, I’m joking. You don’t smoke, obviously, but smoking, what a terrible habit. And so many people here smoke and they just drink all the time. And I’ve just come to realize that, like, if there’s one difference between success and failure in life, it’s being able to control one’s urges. You know, it seems like there are times that I get really stressed out and I have huge problems, you know, if you, if you think having money eliminates your problems, no, it just adds zero to them, okay? They just get bigger as all okay? But in perspective, still better to have money than not, I’m sure a cigarette would make me feel better at times of stress, but God I’m not gonna I wouldn’t make you smell better. I wouldn’t make it smell better, that’s for sure. But God, I’m not gonna do that. Right. And, and it just seems like you know, people that have trouble in life that don’t get very far they just don’t control these, you know, this, this like need for instant gratification. And when it comes to investing, like think of the concept of investing in real estate or whatever the whole concept is that you Save and form capital, you delay gratification. You don’t get everything you want today, you don’t buy that cool new smartphone, you don’t buy that cool new big TV, don’t go on that vacation, maybe don’t drink so much. You get to bed earlier, you wake up earlier because of course I think that old saying is pretty true Early to bed early to rise makes a person Healthy, Wealthy and Wise. And you do the concept is you delay gratification, and you form capital you save for your future. And, you know, that’s what successful people do. I mean, you could argue that they’re, they’re more intelligent. I don’t know, I see a lot of successful people that don’t seem very smart to me, but they’re smart, in least in one way in and you know, maybe this is a legitimate form of intelligence, being able to see the future, right, and being able to plan for the future today and being willing delay gratification for a better future. And if there’s one key, that’s it, you know, like in anything in life, right? whether whether it be health and fitness or investing, or anything, right learning, you’ve got to delay gratification to maybe be in a classroom or be listening to a podcast like this when everybody’s out there playing. Any thoughts on that?

Brittney 20:25
I think the delay gratification just sums it up really well. I mean, because right when you started talking about smoking, My mind went there as far as it’s also just so expensive. You know, think about depending on how many years you’ve been smoking, add that all up Plus, you know, if you like coffee on top of that, if you have excessive drinking, or, you know, I’m not saying you can’t have a drink here and there, you know, have one with dinner with friends, but just start adding that up. And you take that and a few other you know, things here and there and you got an income property. Yeah. And so it’s Really that you know, especially several years ago, but you know, now you might need a little bit more, but it’s still there and the the dollars add up,

Jason Hartman 21:07
be willing to delay gratification for a bigger future that is the, whether it be at the national level or the personal level or the the corporate or business level. That’s, that’s what it’s about folks. You know, that’s what it’s about. It really is at the core of it. Hey, let’s talk a little bit about the trip and some of the different properties I saw and stuff like that, because I didn’t do all that great stuff you’re suggesting I do on Twitter now that I actually use Twitter. And I’m, I’m kind of upset with Facebook, as you can tell. Everybody go out and call it fake book. Okay.

Brittney 21:43
Hashtag hashtag fake book. Oh,

Jason Hartman 21:45
hey, I did a hashtag on Twitter and I hope I started a new one. Shame on Facebook. There you go. Hashtag shame on Facebook. I think I started that one, because I looked it up first. And it didn’t seem like it was out there. So if I’m doing it right, but again, I’m new at Twitter. So, yeah, yeah.

Brittney 22:02
Well, so Jason, tell us a little bit about where you’ve been. What markets? I mean, are there any potential markets for income properties? And tell us about it?

Jason Hartman 22:11
Yeah. So first of all, food is a tricky market. Of course. It’s a huge state. It’s like saying California, right. It’s a big place. So there are a lot of different markets. And as we’ve talked about on prior shows, there are there’s no such thing as a national housing market. There are about 400 local markets or metropolitan areas, right MSA is metropolitan statistical areas, but within every MSA is a whole bunch of sub markets within those and so you’ve got to be very micro focused on this stuff. And you’ve got to understand that all real estate is local. All real estate is local, of course, I basically after Jekyll Island, I drove back down to Jacksonville, then down that coast. area a bit on the eastern coast. Okay. And then went through well looked at some stuff in Daytona Beach area, didn’t really find anything there. Now we have done business in deltona. Okay which is different, okay, which I didn’t know that right away when we started doing business there. And I thought Daytona Beach that’s famous. And I guess Daytona Beach is trying to claim that they are the most famous beach in the world. There’s a huge sign out there that says that so it must be true. And of course, that’s a big Spring Break destination and so forth. And then went through Orlando, of course, you know, we’ve done quite a bit of business in Orlando over the years and we had a we had a property tour there somewhat recently. Then went over to Tampa, St. Pete area, and I looked at two markets there. Of course, I looked at Tampa thinking again how much I really like that city. And again, My mind went to Should I move to Tampa because my ultimate goal at some point in my Life is to live in a no income tax state. You can’t get out of paying the federal tax. But if you live in places like Washington State, like our venture Alliance members, Neil and Elizabeth do, or if you live in Nevada, or if you live in Texas, or Florida, or Tennessee, you know, any of these no income tax states, there are several of them. You know that that’s a huge difference. When I moved from the Socialist Republic of California to Arizona. My taxes instantly went down by over 60% on the state level, so that was fantastic. But Arizona still has tax now I’m even thinking, gosh, if I could, if I could avoid a state tax, that would be awesome. So I really like Tampa. It’s too expensive in the core to actually have working investment properties but it you know, it’s great place to live. I looked at it, you know, selfishly on this tour, right. I did look at some homes that I’d consider buying myself right. And there was some great stuff, but first, we looked south of Tampa In some of the markets down there, and we met with a new potential provider, a wall street guy, who basically just left Wall Street and decided he was going to get into the real estate game where he was just fed up with the cookery and Wall Street and, and all of that stuff, but he is working with some institutional money to buy properties. So we looked at some of his inventory, and I can’t say it was like, you know, a home run, okay, but not bad, not bad. There’s some possibilities there, we’re going to look at more inventory, you know, on on these trips, sometimes they don’t have the exact stuff we really need to see. So we’ll see maybe four or five properties and then we’ll just look at some neighborhoods, and some of the neighborhoods that we went through to get to another neighborhood, we’re pretty rough, frankly. But when you get to the, you know, through to the part where we were thinking of investing, sometimes they got pretty good. So that’s just something to to keep an eye on. And then we did the opposite thing. We drove over an hour, all the way through. And when I say we, my mom was with me and of course Coco was with me. So we drove up to the north side of Tampa to Port Richey, and one of our venture Alliance members, Gary asked me to check out that area and he’s been investing with us for several years. Hi, Gary. So he asked me to check that one out. And we did. We went up there and took a look. And wow, I didn’t think the area was real great or anything, but according to our provider there, he says that they’re opening a new Amazon distribution center. And and by the way, shame on Amazon too. Okay. Do you know that Jeff Bezos hired like 20 reporters to go and like defame Trump, and listen, I don’t even like Trump. I think he’s weird. Okay. But I mean, that’s just wrong. Like this is like predatory journalism. Anyway. Okay, another tangent a risk there. So I’m gonna shut up now. And, and we looked at this market, and there’s a new Six Flags amusement park, going And not too far from there. And so that’s going to stimulate the economy a lot. And kiss houses are clean. And there and I took some videos, a little two, three minute videos of the houses, and we’ll probably get those posted on our YouTube channel. As I know, you’re going to say we better do that, right? Brittany, I know you’re gonna, you’re going to say if you’re going to insist on that, but they were inexpensive, like for $79,900 in a in a decent working class neighborhood. You can get a good rental property there that he said projected rent would be about 850 for that. And for $99,000 you can do much better. I mean, it was amazing how much that $20,000 improve the neighborhood in the house itself. So I was pretty impressed with that. I’d say that was probably the best thing I found on this trip. Then I spent a little more time in Tampa and just kind of hung out, looked at some stuff, looked at some different neighborhoods there and so forth. And that was another one of my real estate friends and he started sending me some inventory in Tampa and a little bit too expensive to make the numbers work, but we’ll keep looking there. If we could do the greater Tampa area, that would be phenomenal. I’d love to do that market. I’ve always liked that city a lot. And then I drove across the famous alligator alley, they call it and I drove basically across the state and drove into Miami and now I’m here. Did you see any alligators? You know, I did not. But I heard when I was driving across there because, you know, I’m kind of worried. I’ve got Coco with me. I can’t let her out. You know, what if she gets eaten by an alligator or something? It’s very hard to walk that dog in Florida. You know why? Why? There’s so much life here. She’s always hunting.

Brittney 28:45
I mean, the bug is two year old.

Jason Hartman 28:47
Yeah, exactly. The bugs are big enough to hunt here. Okay. And there’s a lizards and squirrels and Oh boy, well, plus

Brittney 28:55
Jason. You had to actually drive your car so you were probably preoccupied with that. Not being able to look out for the alligators, right?

Jason Hartman 29:03
Yeah, I didn’t have the self driving Tesla with me, unfortunately. But yeah, so no, but but I asked the guy at the hotel before I left to drive across alligator alley, I said, Why do you call it that? Are there just alligators? And he says, Yeah, sometimes they’re right in the street, you have to stop and go around them. And he says he’s seen that twice himself. So I didn’t see any but could have. And then I’m doing two speaking engagements at this event here in South Beach, Florida. One is on property management, and the other is on demographics. And we are going to make my slides available to the listeners, right. Yes. And we can just use the old URL that we did before and I could give it out now, although they will the old slides from the last conference I spoke at are there and you can get them at Jason Hartman comm slash I am n Jason hartman.com slash Im n and we will put the new slide They’re probably on Wednesday after my talk. Okay. How’s that sound listeners? Good, Brittany good without

Brittney 30:07
Mm hmm. As long as we don’t want to keep those, you know, still available, and then we’ll use a different URL. They got the old ones already.

Jason Hartman 30:15
Okay? So they don’t need those old ones. But if you want the old ones, then go right now to Jason hartman.com slash Iron Men on Monday or Tuesday and get them and then we won’t have the new ones up there till probably Wednesday. Brittany, is there anything else we should talk about? before we adjourn?

Brittney 30:33
Well, you really covered Florida, I have the map up in front of me, I kind of want to do a visual for our listeners, and maybe send out an email as far as all the places you went to and just kind of recap what we just did. So look for that in your email box soon. And if you’re not on our email list, make sure you go and opt in at Jason hartman.com. And then we’ll recap that for you guys too. And send it out

Jason Hartman 30:55
and be sure to join our email list. You know, we really don’t ever push this too much, but But you really should, because we have promised ourselves we’re going to get better at emailing stuff. And we’ll have various contests and promotions and good stuff. And we’re going to start reinvigorating our old frugal Friday. Are we Britney? Are we going to do that? We are, we are okay.

Brittney 31:19
And it’s not every Friday, then it’ll definitely be more on a regular basis. But yes, you know, we have a lot of good products to offer. And we want to make sure that it’s enticing and you know, there’s some things that will make people want to buy because it’s a lot of great content that you guys really should get your hands on.

Jason Hartman 31:37
Yeah, good stuff. And, you know, I should also mention since we’re talking about products, the sale at Hartman education comm that’s Hartman education calm is wrapping up here and I believe that’s going to end on like Wednesday. So you’ll want to go check that out. You can buy that bundle and a good bargain price. bundle of our online products are two of our meet the Masters courses. One of our Jq live courses on there. So lots of good education there. Hartman education comm You know, there’s free stuff up there as well. So check that out. And be sure you subscribe to the show. We also appreciate so much your writing review for the show. So thank you for doing that. And be sure to subscribe so you don’t miss any episodes. And also thank you for telling your friends about it. We will keep them coming as we approach Episode 700 in the not too distant future. I can’t believe it. But you know, in not too long, we’ll be at Episode 1700 so I can hardly wait.

Brittney 32:34
You know, I think I came on board Jason in Episode 67. Really? You remember that? Oh, wow.

Jason Hartman 32:40
That’s the first one I remember. So it may have been a couple before that. But yes, it was right around that timeframe. And wow, it’s been you’ve been busy folks. All listeners can chart their life based on our episode numbers. Forget about date and you’re just go episode number yet I was I was having my kid and episode number 692.

Brittney 33:07
Where are you going to be at mid September? Should we predict?

Jason Hartman 33:09
Well, that’s gonna be it too. But yeah, maybe well, that’s a good idea. All right. Hey, folks, thank you for listening, go check out the properties at Jason Hartman calm in the property section. inventory is scarce, it is going fast. One of our venture Alliance members was rather upset that he lost a property he wanted. So we’re sorry about that. That’s just the way the market is. Remember, real estate has it just has built in scarcity. But keep the faith because there’s just nothing better out there. It’s the most historically proven asset class in world history. We will keep good inventory coming and you know, on this britany I’ll tell you something, people always ask about inventory. There’s just not enough to choose from, when are you gonna open this market or that market and I tell you, it would be really easy to create tunnels. have new inventory of properties on the Jason Hartman comm website if we weren’t picky,

Brittney 34:06
yeah, that’s what I was gonna say, then we could have more, but the quantity is going to go down or the quality excuse me is going to go down.

Jason Hartman 34:12
Yeah, the quantity quality would go down. And look, folks. I mean, we’ve been doing this a long time. You only get one reputation in life. And we just don’t we could make a lot more money if we peddled crap, like some of our competitors do, okay? But we’re not going to peddle junk properties. We want to really try and get good quality inventory for our clients, for our investors. And we will continue to do that even if it means not having as much inventory because what we do have, we want it to be of better quality. So thank you all so much for listening. Brittany, thank you for joining me.

Brittney 34:49
Glad to be here.

Jason Hartman 34:50
Thanks. And happy investing everyone. We’ll see you on Wednesday for the next episode.

Announcer 34:55
I’ve never really thought of Jason as subversive but I just Found out. That’s what Wall Street considers him to be. Really now How is that possible at all? Simple. Wall Street believes that real estate investors are dangerous to their schemes? Because the dirty truth about income property is that it actually works in real life. I know I mean, how many people do you know not including insiders who created wealth with stocks, bonds and mutual funds? those options are for people who only want to pretend they’re getting ahead. Stocks and other non direct traded assets are a losing game for most people. The typical scenario is you make a little you lose a little and spin your wheels for decades. That’s because the corporate crooks running the stock and bond investing game will always see to it that they win. This means unless you’re one of them, you will not win. And unluckily for wall street. Jason has a unique ability to make the everyday person understand investing the way it should be. He shows them a world where anything less than 26% annual return is disappointing. Yep. And that’s why Jason offers a one book set on creating wealth that comes with 20 digital download audios. He shows us how we can be excited about these scary times and exploit the incredible opportunities this present economy has afforded us. We can pick local markets, untouched by the economic downturn, exploit packaged commodities investing, and achieve exceptional returns safely and securely. I like how he teaches you how to protect the equity in your home before it disappears and how to outsource your debt obligations to the government. And this set of advanced strategies for wealth creation is being offered for only $197 to get your creating wealth encyclopedia book one complete with over 20 hours of audio, go to Jason Hartman comm forward slash store. If you want to be able to sit back and collect checks every month, just like a banker Jason’s created Wealth encyclopedia series is for you.

This show is produced by the Hartman media company All rights reserved for distribution or publication rights and media interviews, please visit www dot Hartman media.com or email media at Hartman media.com. Nothing on this show should be considered specific personal or professional advice. Please consult an appropriate tax legal real estate or business professional for individualized advice. opinions of guests are their own and the host is acting on behalf of Platinum properties, investor network, Inc. exclusively.


To start the show, Jason Hartman introduces Buydown and gives his thoughts on whether it’s better to buy a rate down or put more money down. He also explains how points work and how they affect your loan amount. Afterward, Jason plays a recording of his session on SWOT, aka Strengths, Weaknesses, Opportunities, and Threats, as they apply to real estate.

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 0:12
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. Real estate investors.

Jason Hartman 1:03
Welcome to the creating wealth show. This is your host Jason Hartman Episode Number 692 692 on the road to Episode 700, thank you so much for joining me listeners around the world. Today, our guest will be none other than that guy who is always going off on what’s he going off on? tangents. Yes, that’s good old Jason Hartman yours truly.

And this is a recording from a live talk that I gave on a SWOT analysis, SW ot story strengths, weaknesses, opportunities and threats as they apply to the most historically proven asset class in all of the world. And that is income property, income property. So we’re going to talk about what are the strengths and you know, we’re always talking about the strength. So actually, when you hear this recording, you’re not going to hear that much about The strengths. There are so many more than I cover in this SWOT analysis because it’s the most historically proven asset class in the world. Of course, you know that already because you’re listening to the show and you get it. It’s better than the modern version of organized crime known as Wall Street. Yes, the modern version of organized crime, the one that makes Al Capone that’s the old gangster, the Chicago gangster, the mafia guy, right? It makes him look like Mother Teresa in terms of the amount of money but Wall Street scoundrels are stealing. And you know, there was just another big scandal on Wall Street. Maybe we’ll have time to talk about that for a moment before we get to our guest our live recording of yours truly talking about SWAT. But before we do that, I want to talk to you about something called a buy down. And this is something that you may or may not want to use. As you are purchasing and financing your income properties, and maybe even your own home, it can be a very good deal. It’s not always the best thing to do. But we as long term income property investors, we like to buy and hold and usually say, hey, try and buy and hold your properties for how long? 27.5 years? Yes, why 27.5 years. So you can run the depreciation schedule, because income property is the most tax favored asset class in America. And 27.5 years is the depreciation schedule on commercial properties. It’s longer, it’s 39 years, so it’s not as good on those commercial properties. The residential investment properties have a shorter schedule, which means you get about 25% more time. benefit, because you get to depreciate them over a shorter schedule, which means more tax benefits sooner. And with the time value of money concept that we all understand because we listen to the show, and we’ve talked about it before, with the time value of money $1. Today $1 saved today is better than $1 saved in the future, because inflation will make that future dollar worth less money. And it’s not just inflation. It’s also the opportunity cost of what you might use that dollar for today, that could help you grow that dollar versus having it in the future and not being able to use it today. So it’s not the time value of money concept isn’t just about inflation. It’s also about opportunity cost. And remember, when you have money tied up in savings accounts, Home Equity, equity and income properties or rental properties or investment properties in a mutual fund in an s&p 500 index in bonds God hopefully you don’t have bonds those absolutely suck as I predicted they would. They’re really terrible now they’re actually more terrible than I thought they would be what I predicted that many, many years ago and talked about bonds, that’s a subject we should really do an episode on in and of itself, that bond subject. And when you don’t have use of that money, to put it to its highest and best use, that represents an opportunity cost. So you don’t ever want to have lazy money. You don’t want to have money tied up in things that isn’t providing the highest and best return on investment. You want to get the maximum ROI. So by downs, what is a buy down? A buy down is when you as a borrower, when you’re financing a property have the option to pay More loan points up front. Now why would you want to do this because you can buy down your interest rate in doing so. So points 1% of the loan amount. That’s a point. That’s what I didn’t know, when I went to my first real estate seminar at age 18. When the speaker got up there and he was talking about points, I thought, What’s a point? Well point is just 1% of the loan of the loan amount of the amount financed. So if you have $100,000 loan, one point would be $1,000. You have the option to prepay and pay more points and lower your interest rate. See points are really just prepaid interest. points are prepaid interest. So for example, if you’re going to buy a property to flip it, and instantly resell it, your goal as the buyer financing That property would be to pay zero points. Because you, you will only be paying interest for a very short time on that, that loan. And so it’s better to take a higher interest rate. And maybe pay say you’re a flipper and you’re getting hard money loans out there, right, which hopefully you’re not in that, you know, it’s not our thing too much. We do a little bit of it, but it’s not our main thing. Our main thing is buy and hold investing because, as I’ve always said, I’ve noticed just over the many years, I’ve been in the business, that the people who who do the flips, they have spending money, but the people who buy and hold the properties and build big portfolios, they have real wealth, and hey, spending money ain’t bad, but I’d rather have real wealth any day of the week. Okay? So points are just prepaid interest. So if you were doing a flip, for example, and you were thinking, well, gosh, I’m going to flip this property really fast. I know No, I’m gonna sell it in a month hardly gonna own it for any period of time at all. You might be willing to pay 16% Yes, I did say one 6% 16% interest with no points over maybe 10% interest with two points because points are prepaid interest. And if you’re only going to keep that loan for a very short time, it’s going to cost you more money to pay a higher point value or prepaid interest. Now let’s get look at the example that we might face. And I have to be frank with you. I don’t think these examples are very compelling, but I’m going to share them with you anyway. So I just got a quote from one of our lenders who if you talk to any of our investment counselors, they can refer you and I wanted to have totally accurate up to date pricing. So all of this is his math. And it’s his, his his point chart. Now when when you get alone an iPhone Several mortgage companies over the years I don’t own one now but I, I’ve owned several over the years, when you get a loan, what they call par meaning the rate being at par that means no points are paid at all. So at par, the rate today, according to him on an investment property is about and it depends on the loan to value ratio, your credit score the whole package, okay, understand that, but the rate he quoted was 4.875%. at par, meaning you don’t pay any points, that’s the rate you’ll get 4.875% of course rates are subject to change without notice. Okay, so if you wanted to pay one point, and by the rate down, you would get a rate of 4.6 to 5% 4.6 to 5% with one point point or $1,000. Now, what would be the difference in your mortgage payment on a $100,000 loan? So in this example, say you purchased a $125,000 property, and you put 20% down. So you got an 80% loan to value ratio, that means your loan amount would be a nice even $100,000. And I point would be a nice even $1,000. The payment at par at 4.875% would be $529 per month. Wow, that’s cheap. Oh, wait. Ah, yes. We have some of the lowest rates in history right now. Are you taking advantage of that? Are you stocking up on these low cost 30 year fixed rate mortgages, they’re huge assets to us as investors. I hope you are. I hope you are. Okay. So with no points, your payment would be free. 529 per month, if you pay one point and by the rate down, your payment would be $514 per month. So taking the difference of what how much would that be? Well, it’d be 15 bucks a month less your time horizon to recoup, the cost of the extra point that you bought the rate down with would be 60. Approximately, I’m rounding slightly here about 66 months. Okay, before you would break even, that’s five and a half years. Now, I do have to say that buy downs that I’ve priced and actually done myself on my own portfolio over the years have been better than this. This is not as good as what I thought I would get. This time horizon is a breakeven point in five and a half years. Not bad if you’re going to keep the property for 27.5 years, or if you’re going to keep the property for eight years. It might may well be better to pay the extra point and by the loan down.

Jason Hartman 12:07
But usually I see the time horizon here of about three and a half years. Usually it’s a little better than this. And I don’t know if buydown pricing is just not as good as it used to be. Or if maybe our particular lender that quoted these rates, doesn’t have the best buy down pricing? I do not know the answer to that question. I’m really just wanting you to think about this. I’m wanting to give you an example of how it can be. Now the same deal, let’s just do some other math here. If you took that same loan, and you bought it down with two points, in other words, $2,000, your payment would go down to 499 per month, you would save 30 bucks a month, and your time horizon you can see how it would basically be the same right? So that doesn’t change anything but it does change if you change the law. to value ratio. So let’s do one more example here. And let’s go with a 75%. LTV or loan to value ratio, meaning on the same house, your loan amount instead of being $100,000. It would be $93,750. Okay? And that par because you’re putting more money down. Now, more money down is not the same as a buy down. You do, in most cases get a lower interest rate. If you put more money down. Well, of course, there’s less risk to the lender. So they’re better collateralized if you have more skin in the game, and they’re going to give you a lower rate as an incentive to put more money down. So if you put that extra 5% down, what is that that’s about $7,000 or a little less than 7600 6250 bucks extra down payment, you would get a rate of 4.5% Which would bring your payment right down to $475 per month. But remember, you have a lower loan amount here, you’re financing less. So what does that do? Well, the disadvantage is you’re going to get less leverage on the deal, you’re not going to have as much leverage. And because you get it because you listen to my show, you know that leverage is an extremely powerful tool, and used prudently and properly. It is a fantastic thing. I always say debt is my favorite four letter word. No, it’s great. I mean that in a positive way. I love debt. As long as it’s not consumer debt. I want debt. I want lots of real estate debt. In fact, there are old sayings that say things and you know, forgive me if I don’t get this exactly right. But I this is not my saying. I’ve just heard it out there. They say the amount of money you owe on your real estate today will be the amount of gain you have in I don’t know what they say like five years. or seven years or something like that. And so the theory behind that statement, or the thesis of that statement is that if you owe a million dollars, today on your real estate, that you’re going to gain a million in, I don’t know, seven years or something like that. I can’t remember the exact example they use. Having more debt is better, because you get more inflation and two step destruction, you get more leverage, you get less opportunity costs, because why? Well, you have more money freed up, heck, you could buy a whole nother property with that extra money, right? For example, if you’re putting that extra 5% down on this property, well, you do that four times with four properties. And hey, you could have just purchased another property and have a larger portfolio. So there are things to think about here that are important issues, and leverage, a very, very powerful tool. Okay, but looking at this example, you Your interest rate goes down to 4.5%. Now, what here’s a good comparison, what would it cost you? Here’s a good question. What would it cost you with an 80%? LTV or loan to value ratio getting the higher leverage amount to buy that rate down? Or is it better to just put more money down? It’s a great question. Jason, thank you for asking that. Great question. Oh, you’re welcome. That was a good question. Too bad. We don’t have stereo it sound like I’m talking to you in different ears. We always make the show as mono. So we’re more flat and boring, right. But if that was in stereo would have been kind of good. Anyway, so it would cost you 1.5 points or 1500 dollars. So you could either pay or you could you could get the higher loan amount and pay 1500 dollars, to have the same interest rate that you can get for free or at par with 5% more than that. So looking at that difference, the way we analyze that is we say, Okay, I can either put down an extra $6,250 in downpayment or I can simply pay 1.5 or 1500. dollars more in points, and I can have the same rate.

So, that’s an interesting analysis. And frankly, it’s hard to analyze that I’m not a mathematician. And I don’t exactly know how to weigh that out. Because you get less leverage, you have more opportunity costs, you have a lower loan balance, that’s why your payment is lower. It’s not just the rate, but your rate is also lower. So these are sort of amorphous questions. You can’t exactly answer that one. But on the buy down, you can answer that pretty scientifically, because all we’re looking for there is our breakeven point, what is the time horizon to the breakeven point? So let’s just look at one Example then we’ll go to our guest Jason Hartman. Oh, I get punchy sometimes when I do this, you know, by the time you hear this recording, I will be in Fiji. I’m recording it here in Scottsdale, Arizona, where it’s hot, but it’s a dry heat. I will be in Fiji at Tony Robbins Resort by the time you hear this, hopefully not getting bit by too many mosquitoes. But living with passion and hearing all about Tony’s great techniques in terms of life and wealth mastery. That’s the name of the events I’m going to there. More on that later. 4.5% no buy down at par for free at the 75% loan to value but what if we were to pay $1,054. Now let’s even do more. Well, what if we were to pay two points 1800 and $75 more, we could buy down our rate by a half a percent. So it would go from 4.5% To only 4% for a fee, a buydown fee of 1800 and $75. So what happens to our payment? Okay, the first payment is $475. god that’s so cheap. It’s mind boggling. You really got to stock up on these long term fixed rate mortgages. They’re a phenomenal asset. So the new payment at with the buydown is 448. So let’s take 475 and subtract 448 and that is $27 a month. And what do we want to do next, folks, you already know the answer. We want to take 1875 which is the amount of the buy down that’s what two points will cost you. And we want to divide by $27 and we get 69.4. That represents the number of months to your break even point. Now we take that and we want to divide it by two Well, so we know the number of years, and that’s 5.78 years. So interestingly, do you notice that on the lower loan to value ratio where you’re putting 25% down, the break even point is longer. Interestingly, in other words, paying more points on that deal is a little bit less valuable, you get less bang for your buck on that pie down than you do on the higher leverage buy down where you’re only putting 20% down on the property. So that’s kind of interesting. But again, I want to tell you that most of the buy downs I’ve seen and done over the years are a little bit more desirable on this, and I haven’t shopped for them in a few years. So the price of them just may have gone up. That may be what’s happened. Look at the deals, you know, I love it when you hear these real estate gurus out there, and there’s such a Bunch of crooks, half of them, half of them. Maybe 80% of them are crooks.

And they say things like, air never been a better time to invest in real estate. Ah, that’s wrong. That’s not true. Of course, there was 1972 was a lot better. 2010 was a lot better. I’m sure the deals ain’t as good as they used to be okay, to use slang. Obviously, this is not bad. I mean, if you can break even in five and a half years, this may well be something you want to consider. If you think that you are really going to hold these properties for the duration. If you’re going to keep them a long time, which if you’re following my plan, you probably will. That’s the likelihood. Now I move my portfolio around once in a while, but most of it is long term buy and hold stuff. As you know, and I’ve talked about this on recent episodes, I do some 1031 tax deferred exchanges. I sell One property and I get to in the exchange, hey, that’s a great deal. There are lots of things you can do move things around. But by and large, you’re going to keep your property more than five and a half years, based on the scenario I’ve outlined here today, it would make sense to really consider the buy down. Why do I say it? I wouldn’t absolutely do it. Okay, because obviously, you can just do the math and know you will definitely break even in five and a half years. Well, the reason I don’t say definitely do it is because of that opportunity cost issue. And that time value of money issue. Look, if you have to pay an extra $2,000 on the buy down. You do that 10 times on 10 properties, and you’ve got just about enough money to maybe buy another property, depending on how you finance it. It’s all complicated, of course, and how you sequence your mortgages and there’s a whole zillion other little issues there. But you know, look at it. learned about inflation from a fantastic economics teacher that I had when I was a young boy. And his name was wimpy. And he was on a cartoon. Yes, Popeye, you may know that, okay. And wimpy was on Popeye and wimpy taught me something about inflation. And he taught me something about opportunity cost and the time value of money. How did he do this? Well, this little cartoon character, I wonder if he even knew he was teaching me this. And here’s his famous saying, When be and I’ll try to impersonate him wimpy the cartoon character on the Popeye cartoon when he would say, I’ll gladly pay you Tuesday for a hamburger today. So he would always try when he was like this deadbeat and he would always try to get a hamburger today, but to pay for it later. wimpy understood the time value of money. Right. So there’s your little economic life From a cartoon character, how do you like that? We Yeah, you know, we do really sophisticated stuff on this show. Don’t wait. Alright, well, let’s jump over to the live recording, talking about the SWOT analysis, strengths, opportunities, our swings, weaknesses, opportunities and threats SW OT, make sure you visit Hartman education comm for some great educational products that go into tremendous depth. And they are unlike the podcasts Look, the podcast is a fantastic way to learn. But with a podcast, it’s more like reading a newspaper or a magazine or watching the news, right? It’s, it’s this and it’s that and it’s this hodgepodge of ideas. But if you want more structured stuff, get some of our courses, get our jQ Jason Hartman university course and you can get that at Hartman education comm or some of our products at Jason hartman.com either one and our meet the Masters recordings, you can get those there as well. Hartman education comm or Jason Hartman comm check those out. We’d love to have you take advantage of the many many of you have, be sure you’re subscribing to the show so you don’t miss any episodes. And thank you so much for your views on iTunes, Stitcher, radio or whatever podcast platform you’re using. We really appreciate the nice reviews and the kind words and if you haven’t reviewed the show, we would very much appreciate it if you do. Thanks for listening to this little intro on buy downs. And now let’s talk about the SWOT analysis.

First, we’re gonna start off with something we’ve only done once. And that’s a SWOT analysis. How many are familiar with SWOT? Yes, SW ot strengths, weaknesses, opportunities and threats, both the internal and the external threats and opportunities that come with real estate investing. And of course it covers the strings. These are internal things internal In our case, 2d investment, and they’re positive things. The weaknesses are internal factors, but they’re negative. And the opportunities are outside. They’re external. And they’re positive. And the threats are obviously external, but negative. So as we dive into this, let’s break this down and look at some of the strengths of income property as an asset class. You know what I say? It’s the most historically proven asset class in the world. Income property is the most historically proven asset class in the world. And one of the great things about it is that it’s so fragmented, right? You’ve heard me talk on the podcast before about what? embrace the fragmentation, right? embrace the fragmentation. And this is something that frustrates a lot of people when it comes to income property. They don’t like the fact that it’s fragmented. They think, you know, why can’t this be simpler? Why can’t it be easier? Why does my property manager in Orlando do that? things differently than my property manager in Atlanta. And they do things differently than my property manager in Memphis. Right. So that’s one of the frustrations we constantly hear from you. It’s it’s one of the things that really bugs people, why can’t it be more standardized? Why can’t it be more refined, more simple? Well, we are trying to help with that. And when Fernando speaks this weekend, he will talk about a big step that we took to that end to help you that we have never announced before, you’re going to hear it here. First, a big step that we took in the world of software just about a week and a half ago. Okay, so you’re going to hear more about that, especially tomorrow, when we go over that in detail. So that fragmentation, as I always say, it is the opportunity the fragmentation is the thing that keeps the income property are the big institutional investors out of income property that preserves the opportunity For us, for the regular middle class investor, okay, the fragmentation increases returns, because the institutions aren’t in our game. Now, how many of you have ever thought about or invested in or looked at? So that’s a pretty broad category, right? commercial property? How many of you consider that or done it? Okay. fairly small number. Okay, commercial property, right? If you look at these institutional commercial properties, and usually that’s in the category of anything over about $4 million and above, institutional investors will accept really low, really, frankly, crappy returns on their investments. The reason is they have so much capital deployed, it’s deployed in a more, quote, perfect type of market, deployed in a more perfect market in the sense that all of those investments are underwritten. There’s a word for you they’re underwritten. So when one of these big commercial real estate investment firms looks at a deal maybe it’s a big apartment complex or a big mobile home park, or a big self storage facility or office building or whatever they quote, underwrite the deal. And that means they do some due diligence on it. And they kind of investigate it. And they have this common language, and this common format for discussing the deals and the best investment group for this type of thing of underwriting and having a common language. Who would that be better than commercial real estate, the best group of people out there, it would be Wall Street. They’re the best at having a common language and an understanding of how things work. In fact, companies on Wall Street have the common standard, not that they follow it or anything for accounting. What do they call that they call it gap, generally accepted accounting principles gap. So the more refined and the more perfected and the more standardization there is in any investment, the lower the returns on that investment.

And the more fragmented and the more imperfect. And the more unstandardized The higher the returns. And in the world of residential style real estate investing of single family home type investing, it’s really imperfect. This is a totally fragmented market. And in the US, it’s less imperfect than it is around the world. Okay, I met someone from Brazil this morning that you’ll you’ll be talking to not Fernando, he’s from Brazil too. But another guy on Giovanni’s team. And, you know, you’ll meet him on the bus and when we’re touring properties, and so forth, and he talks about how he helps Brazilian investors buy property in the US. So let’s compare residential real estate now. To resume in the US compared to residential real estate around the world, I have looked at property in so many different markets around the world and say that the US real estate market is a very special real estate market. Because the data that’s available on us real estate is much more comprehensive than it is around the world. You know, this whole concept of an MLS. A multiple listing service is a US concept. Now other countries kind of have this but it’s not to the extent that we have it in the US. And we have things like Zillow and truly and so there’s much more data available in terms of public records and knowing what a property is worth here. So it is more perfect than it is around the world, which is a good thing because you can feel more safe in your investment and also it’s been subsidized by the government since the Great Depression, and so forth. But the fragmentation is just you Huge, this is a big deal. It is a huge opportunity. To some extent it’s kind of, you know, towards that direction on the continuum of the Wild West concept versus Wall Street or even commercial real estate. So here’s an example from Wall Street. How many of you own stocks? Why do you own stocks? Wall Street is the modern version of organized crime. Okay. So if you own a stock and let someone name a company they own stock in and that they know what it’s trading for somewhere around what it’s worth now, apple, so apples like 110, right? Anybody own Apple one, really? So you own Apple stock, right? If it’s trading at 110. I want you to do this experiment. You know, say you’re with Schwab and you trade online with Schwab Cola, the the rapid Schwab and they’re really good Schwab is a great company. By the way. Really helpful, they answer the phone, and they’ll help you. And I just want you to call them up and say, hey, look, I know that my Apple stock is trading at 110. You know, but I’d really like to see if I can get more money. Can you do a little extra marketing and a little extra promotion and you know, put a coat of paint on it and see if you can sell it for 150. You can’t do that right because of the perfection of the market. The market is perfected, it will only trade for what it trades for period. Same with gold or silver or any of the precious metals. It’s a perfected market. Take the metals for example, that becomes more imperfect in the field of numismatics. Okay, rare coins. They’re made out of the same precious metals, but they become more imperfect because of their art value. Right. And so this is true. This is the advantages. It’s one of the huge strengths of income property in the residential market, the one to four unit market as An investment, the fragmentation, it’s huge. Believe me, this is a big deal. Now there’s another aspect of this fragmentation that I want to mention to you. When you’re looking to buy a property that might be a single family home, or a four Plex or a duplex. When you’re looking at this asset, you look at it through the eyes of an investor. And when I got into this business of nationwide real estate investing 11 years ago, the first thing I decided I had to do is standardize the data, data standardization. And so we do that if you look at Jason Hartman comm, you’ll see our properties presented in a standardized format. So here’s a huge advantage for you as residential income property investors, you buy the property like an investor, but if you decide someday to sell the property, who you gonna end up selling it to another investor, you’re going to sell it to a homeowner and owner on.

And the likelihood is you’re going to sell it to an owner occupant who looks at it through rose colored glasses. They look at it from an illogical emotional perspective in a fragmented market. And they always view remember, I was in the traditional real estate business for many years. Okay, that’s, you know how I did most actually most of my career has been in that field. I worked for REMAX for many years. I, you know, worked for century 21 when I started for about nine months and then I worked for REMAX for 12 years. Okay. I can tell you that when people look at a house that they want to buy to live in as an owner occupant, they look at it through the process of elimination, and they look at it through the process of scarcity and comparison to what else you know, they have out there in the marketplace and their expectations. When someone calls on a property and they’re considering living in it. They have one goal when they call Before al gore invented the internet, we have this thing called the newspaper. Okay. And, you know, we’d place ads in the newspaper, and people would call or they’d see a sign in front of the house. And they’d call on the property. And when they call you, they have only one goal. And the goal is to eliminate the property to move on to consider another property. It’s simply a process of deduction, elimination. That’s how a homebuyer things. And so when they do that, they have this, they have this view of the world, and it’s out of scarcity. And what motivation do you think is more powerful for humans? Is it the possibility that I might gain something or the possibility that I might lose something?

Definitely fear of loss far more powerful. In fact, just test yourself, you know, go into a transaction and you know, say Well, you know, if someone takes advantage of me in the deal, and they overcharge me by 100 bucks, you know, how long does it take you to earn 100 bucks, especially if you’re in your own business or you have a little of your own business on the side, right, you can earn 100 bucks pretty quickly. But if you check out the hotel and your hotel bill overcharges, you 100 bucks, you’re gonna be mad, right? And it’s just the way we operate. We operate this way out of scarcity out of fear of loss. Because for eons before this, that’s how our world was our world was not abundant, it was scarce. And, you know, maybe over the last hundred years during the Industrial Revolution, we have the first time in human history that we’ve actually had abundance. And so our minds have not adjusted to the new world at all. We can earn the hundred dollars a lot faster than we can bitch and complain about losing it, right. That’s just the way our minds are. And so we take advantage of this. And even if we don’t sell our property, the whole marketplace is operating like this out there. You know, when you sell a commercial property, it’s sold by a strict measure of cap rate, capitalization rate. In other words, the income the property produces. So, fragmentation, huge strength, huge strength don’t minimize that leverage. The leverage offered on a residential income property is much better than the leverage offered on a commercial property, a commercial income property. So that increases our return on investment. And it’s the most tax favored asset in America. And taxes are the single largest expense in our lives. We live in Florida. So we’re a little lower, though, right? Isn’t that good? So those are some of the strengths of income property. Now, there are many other strengths, okay, any any strengths you’d like to share or discussion on this or questions on this real quickly? Okay, weakness. Why does it suck? Okay? I’d say the hardest part is the management part. Management is so critical when it comes to income, property investing, management, management management. In fact, this is where it all falls apart for most investors on the management. Would you agree with us? How many of you own investment property now? Yeah, most of the room, okay. Is the management The hardest part? Yeah, it can be. I mean, sometimes it’s not if you have a great property manager, or better yet a great tenant, the management gets pretty easy. And you know, most tenants are pretty great. And we’re going to talk about the three different or really four different classes of income property and how those tenants differ this weekend. And so we’ll talk about that as well. So management is difficult. Of course, tenants can abuse your property, and that’s a weakness, rent collection or vacancy, another weakness. Okay, so I think these weaknesses are pretty self explanatory. questions or thoughts on weaknesses? You know, feel free to have interaction here, you know, but Okay, maybe not, you know, usually takes a little more coffee, it’s like after the second break, you know, everybody really wakes up. Okay. So moving on here to opportunities. Well, the opportunities are huge. I mean, this is the most historically proven asset class in the world. So the opportunities well inflation induced debt destruction. You know, I love this thing, right? inflation induced death destruction. It reduces the real value of the mortgage and increases the nominal value of rent and the nominal value of the property. Nominal means a name only. That’s just the name of something. And real estate, as a hedge against inflation, in and of itself, is okay, but it’s not that great. It’s when you leverage that hedge that it becomes great and when you outsource the debt, that that leverage cost you that it becomes great, because then the tenant is paying that debt for you. And hopefully they’re paying you a little extra every month. Okay, so the time we can go back, you know, the the ship has left the dock, so to speak, right. And so we can’t go back, we can only start where we are now. And how many of you have heard me, you know, share that great, great poem, The Reluctant investors lament. I talked about it on the show, you know, written in 1977 when everybody thought real estate was so overpriced in 1977. Okay, we always think that we always think that that’s just the way it is. But regression to replacement cost is different, in my opinion from appreciation. Regression to replacement costs simply means that if you can buy the property for below the cost of construction

And when you buy it below, see, remember, when you look at the performance that we’ll be looking at this weekend, it shows you the cost per square foot. And the cost per square foot. I don’t know exactly, maybe Giovanni’s team can share this with you better than I. But the cost per square foot in in Orlando is probably somewhere in the neighborhood of $80 per square foot, I’m just gonna guess somewhere close to that. So if you can buy the property below the cost of construction, but here’s the thing that Performa doesn’t tell you. It doesn’t include land value. So if you look at the typical hundred thousand dollars, single family home, the land value is probably somewhere in the neighborhood of $20,000. So to find out the real cost per square foot, you have to do a different calculation. Okay, and why don’t we just do this right now while we’re talking about it. Okay, so you got your pen. Do you have your smartphone with your calculator, we’re going to take the typical hundred thousand dollar house We’re going to assume a $20,000 land value. So it’s $100,000. Land is 20,000. This is pretty simple calculation. I know $80,000 is the improvement or the structure sitting on the land, right? Okay, so let’s say that this house is 1400 square feet. What’s 80,000 divided by 1400? Okay, so $57 and 14 cents, right? Is that we said, we’ll just call it 57 $57. If it cost you $80 per square foot to build that house, did we buy below the cost of construction? Yeah, we did. Okay, if a hurricane comes along, or a fire comes along and destroys the structure, depending on the type of insurance you have, the insurance company may pay you the full cost to rebuild it, or they may pay you a depreciated value on it but If it’s $57 per square foot, and it costs $80 per square foot to build it, that delta between those two is built in equity. Now, I understand completely that you may not be able to turn around and sell the property for more than that. But that equity is kind of hanging there. And this is a great safeguard. It shows you that in addition to the potential for future appreciation, before you get to appreciation, the first thing that happens is regression to replacement cost. And when Carrie It was kind of funny how you introduce me because you said, you said, Jason looks at every house as a commodity, right? See, I’m really at heart A commodities investor, we invest in the commodities, but when they’re labeled as real estate, when they’re labeled as income property. It brings special characteristics to those commodities that we don’t get anywhere else. You can go on commodities exchange and buy lumber, copper wire, petroleum products, glass, steel all the ingredients of a house and get three decade long, artificially low fixed rate financing. And you can’t take those commodities once you encumber them without good debt. Okay debt being my favorite four letter word. Okay? Once you encumber them with had debt, you can’t turn around and outsource that debt to a tenant and say hey, you pay my debt for me. special characteristics of income property for sure. So regression to replacement costs happens before appreciation. When you see the market turn and prices start to come back. The first thing you get back is the regression to the replacement cost. In other words, this $57 per square foot house going to $80 per square foot, the replacement cost and after that you get appreciation Just think about that concept. Okay, and ask me about it this weekend. It’s it’s pretty awesome. And then you have appreciation. Okay, so that’s the last one. Okay, what are the threats? overall economic collapse, certainly a threat. And you know, that could change everything.

A few years ago, well, now several years ago, time flies when you’re having fun. We had the worst economic collapse in seven decades. The Great Recession and that’s a wild card. Okay. But I think for many reasons income property is probably your best hedge here. Most people think it would be gold or silver. As you know, I’m definitely not a gold or silver bug. I would far rather own bullets and food and water than gold and silver. Okay, those are far more practical and you can barter with them. And you know, cigarettes and vodka not bad either population decline this This one is tough. And you know, I think everything I’ll share with you this weekend, it’s pretty reliable, you know, it’s pretty darn reliable. But if the population declines, all bets are off. all bets are off. I can’t do anything about that. And I have no solution. And this is why when you look at areas like Detroit, the poster child for big government disaster, when you look at areas like Detroit, you just can’t fix that. Because when the population declines, it’s just over. Okay. And when you look at this on a national level, and you look at countries like Japan, that’s their problem is their population is in decline. You look at Western Europe. That’s a huge problem. You look at Russia. Putin is paying people to have kids. Okay, I think it’s $7,000 get paid to have kids. You look at places like what was my other example? It was a good one China. Oh, yeah. China Thank you. Their their one child policy, absolute disaster and now they’ve reversed it thankfully. Okay. So population decline over there’s no solution for that. Thankfully though in the US we’ve had we have pretty fast population growth, okay. And in the markets when we’re in and the markets we recommend, I mean they’re attractive places to live right. So, so this probably won’t be a problem. Okay. And then other threats any other threats? No. Okay, so let’s talk about how to mitigate these. Number one, spread your risk along multiple properties and multiple markets. Okay, obviously diversify. That’s one of the 10 commandments, thou shalt diversify. You want to have all your eggs in that income property basket, maybe not all of them, you’re probably not gonna listen to me anyway. But I think it’s the best thing going. It’s the best best thing since sliced bread. Okay, so diversification and the law of large numbers, the law of large numbers. So increasing the total number of units or doors in your portfolio creates economies of scale. And it actually reduces your risk quite a bit. So if you have, you know, if you have 25 homes or doors in your portfolio, 25 units in your portfolio, and four of them are vacant, and 21 of them are occupied and paying, you know, your risk is a lot lower than if you have two units, right? It’s the law of large numbers.

Announcer 49:38
I’ve never really thought of Jason as subversive, but I just found out that’s what Wall Street considers him to be. Really now How is that possible at all? Simple. Wall Street believes that real estate investors are dangerous to their schemes? Because the dirty truth about income property is that it actually works in real life. I know I mean, how many Do you know not including insiders who created wealth with stocks, bonds and mutual funds? those options are for people who only want to pretend they’re getting ahead. Stocks and other non direct traded assets are a losing game for most people. The typical scenario is you make a little you lose a little and spin your wheels for decades.

Announcer 50:21
That’s because the corporate crooks running the stock and bond investing game will always see to it that they win. This means unless you’re one of them, you will not win. And unluckily for wall street. Jason has a unique ability to make the everyday person understand investing the way it should be. He shows them a world where anything less than a 26% annual return is disappointing. Yep. And that’s why Jason offers a one book set on creating wealth that comes with 20 digital download audios. He shows us how we can be excited about these scary times and exploit the incredible opportunities this present economy has have afforded us. We can pick local markets untouched by the economic downturn exploited packaged commodities investing, and achieve exceptional returns safely and securely. I like how he teaches you how to protect the equity in your home before it disappears and how to outsource your debt obligations to the government. And this set of advanced strategies for wealth creation is being offered for only $197. To get your creating wealth encyclopedia book one complete with over 20 hours of audio, go to Jason hartman.com forward slash store. If you want to be able to sit back and collect checks every month, just like a banker. Jason’s creating wealth encyclopedia series is for you.

This show is produced by the Hartman media company All rights reserved for distribution or publication rights and media interviews, please visit www dot Hartman media.com or email media at Hartman media.com. Nothing on this show should be considered specific personal or professional advice. Please consult an appropriate tax legal real estate or business professional for individualized advice. opinions of guests are their own. And the host is acting on behalf of Platinum properties, investor network, Inc. exclusively.


Jason Hartman starts the show by sharing a CNBC article about homeownership numbers being at their lowest point in history, which is good news for investors. Then, he proceeds to talk about The Greater Cincinnati market that is available to property tour attendees. Jason shares that local townships offer favorable tax situations and are only a 30-minute drive away from major cities in Ohio. He also discusses large employers in the area that offer positions at many different pay grades, which means a diverse portfolio of A, B, and C class properties beneficial to real estate income property investors.

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 complete solution. For real estate investors,

Jason Hartman 1:03
This is Jason Hartman, thank you so much for joining me today as we have something to celebrate, yes. Something to celebrate something I’ve been predicting for many years. We’ve been seeing it happening for many years. So it sort of stopped being a prediction, I guess, at some point and became just a trend, a trend that we were monitoring and noticing. But I’ve got more good news on that trend line. So here it is. You’re ready. All right. That is homeownership. Yes. homeownership you think I’m probably going to say something like, Hey, isn’t it great news. The economy is recovering, things are going well. And homeownership rates are up or they’re increasing. But no, that’s not me, the contrarian that you know, and hopefully love Maybe love to hate. I don’t know, which hopefully it’s you just love. And that’s why you’re listening to the show. But even if you don’t like me, Hey, thank you for listening anyway. And thank you for telling your friends about the show. You know, I’m not exactly a stranger to controversy now. So homeownership rate is near its lowest point in history. Yes. wonderful news for you. For all of us investors out there. It’s great news. And again, we predicted this a long time ago. We commented on the trend all along as it was happening, and it continues to happen and continues to be great news. So here are the stats and this is a CNBC article. By the way, we’ve got a guest from CNBC coming on the show. Soon that might even be our next interview. I’m not sure. We got George Gilder coming back. He’s a phenomenal genius that has all kinds of interesting things. To say about the economy and technology and how the two of them go together, so I don’t know what we’re gonna play for our next show, but we’ll keep that a surprise. It’s only two days away after all. But yes, this article about homeownership is phenomenal. And it really ties in with our guests today. And you know, this interview with our guest today, I gotta say, I don’t think I did a great job on this interview. It wasn’t one of my better interviews, but I think you’ll still find it valuable even though your host wasn’t at his best. See, I’m making that disclaimer in in advance. Yes. But hey, Jason Hartman, on his worst day is better than most of his competitors on their best day. How do you like that for cockiness?

Oh, okay. Oh, boy. I’m really making a lot of enemies today or tonight. Okay, anyway, I’ll shut up with my silly cockiness. But here we go. So, CNBC article homeownership near its lowest level in history. This is April 28. So it’s very recent here. Home Sales may be rising but home ownership in the United States is heading down once again. After gains in the second half of 2015. The homeownership rate fell. Yes, fell dear listeners to just 63.6% seasonally adjusted in the first quarter of this year, according to the US Census Bureau, homeownership hit an all time high of 69.4%. Back in 2004, that was the silly george bush ownership society idea. Lyndon Baines Johnson remember, Lyndon Johnson Well, I don’t remember him because I was. That was before my time, but I do watch history. I read history, and all that kind of stuff. Or for our feminist listeners, her story Guess why is it his story? Could be her story? Maybe it should be just our story. Hey, that would be the right word. It shouldn’t be history. It should be our story. Our story, see, yeah, there you go. I bet you heard that here first just thought of it. Okay. So yes, the LBJ had the idiotic, Great Society, which obviously turned out to be a disaster. Some people may think differently, but they’re just wrong. And then George Bush, he had the ownership society and that turned out to be a disaster. Maybe the point here is that central planners should stop trying to plan what kind of society we should have. And that should be determined by us little people, US Beyonds, you know, we can decide what kind of world we want ourselves without a bunch of government intervention, right? Both of those turned out to be big disasters and way back to good old FDR. Okay before those other two and you notice we’re going on both sides of the aisle here, folks. We got a republican and two democrats we’re talking about right. So back to FDR, his idiotic ideas those didn’t work either. That was only salvage by World War Two the the largest public works project in all of human history. Again, war is a bad deal. Of course, it’s terrible. It’s destructive. Why would anything destructive ever be considered? Good? I mean, it’s crazy to me that people think war is good for the economy. That idea is that’s pathological. That’s crazy. Okay, that’s crazy. But like having a cup of coffee, or an espresso shot. It gives it instantly gives a jolt right but the the comedown is never good. It’s crash. Okay. Anyway, back to the article because we are host He always gets off on these damn tangents, you got to stop that. All right, so 69.4% back in 2004 under the program that bush set in motion and it was completely stupid, but really Clinton actually, why not blame a democrat when you get the chance. Clinton really set it in motion with the Community Reinvestment Act, actually, that was back to Carter, another Democrat.

But then again, you could blame Reagan because he deregulated all the smells, and that was a disaster to the point here is you see the common theme no matter what side of the aisle you’re on politically. Let’s get the big hand of Big brother out of the pie, and let the free market determine things instead of government intervention. So we talked in the past and we predicted that Several meet the Masters events ago that every 1% decline in the homeownership rate would bring about 1 million. Yes, that’s actually a big number, 1 million new tenants into the rental market. Wow, investors rejoice 1 million new new tenants for every 1% decline in the homeownership rate, and yours truly has predicted or has hoped for a homeownership rate of around 55%. I just, I just kind of think that’s where it should be. I think that’s the appropriate amount. I think if the if the intervention was reduced by the government and the government sponsored entities, Fannie Mae, Freddie Mac, then the homeownership rate would fall to somewhere in the 55, maybe even 50% ballpark and think of what we have happened there that would bring about 9 million more people into the rental market. This idea that having this huge homeownership rate is good for society and good for the economy is simply not true. You’ll never hear this from any other real estate agent except myself. Probably. It’s just it’s just an idiotic idea. homeownership is not necessarily better, not necessarily owning lots of investment properties. Yeah, that’s good. That’s really good. You know, I love that. All right. The article goes on to say that that 69.4% rate in 2004, during one of the biggest housing booms in history, of course, it was a central planner induced boom, not a market induced boom. That was also when mortgage lending lending was arguably at its lowest looses sorry, loosest level in history, very promiscuous those mortgage lenders were. Now they’re kind of prudish nowadays. They’re not so promiscuous as they used to be right? The homeownership rate is now just one 10th of one basis point higher than its all time low in the second quarter of 2050. So it ticked up ever so slightly in the past year, economists continue to point to a recovering job market as fuel for growth in the housing market. But for young Americans, just having a job does not translate to home ownership. Whoa, I could go off on that for 15 minutes. But you know what, let me bite my tongue and continue high levels of student loan debt, tight mortgage underwriting standards. I told you they were prudish. Okay, those more wonders and overheating home prices all are all contributing to very low homeownership rates among the nation’s youngest workers, homeownership, among those aged 25 to 34 is nearly 10 percentage points lower than it was a decade ago. Wow. Do you realize how significant that is? So a decade ago for people 25 to 34 that homeownership rate or from a decade ago has dropped 10%.

Jason Hartman 11:45
That’s frickin huge. It’s like golf. Yeah, golf. Remember I told you about golf properties and golf courses on a prior episode. Do you know that? I mean, if you enjoy vested in a golf course, or spent a bunch of money on that country club membership. You’ve probably been hurt pretty bad, because golf in terms of the number of rounds of golf in the past decade has declined by about 35% that is ginormous. So all those people with those golf course homes, you know, homes on golf courses really beautiful to look at for sure. And if you play golf, hey, even better, but the millennial generation, they don’t have the time or the money to play golf, that this is just not their sport, and apparently neither is homeownership. See how those two ideas almost tie together? You can almost make anything tie together if you’re just creative enough and persuasive enough. Okay. First time homebuyers are still barely 30% of today’s buyers. Traditionally they comprise 40% of homebuyers rental affordability remains a big problem in many places. And that makes it harder to save for downpayment said. And we have this guy on the show before. Jed Galco. He’s been on the show, an independent economist and senior fellow. Oh, I guess he, I guess he changed jobs. Cuz that’s not who he was with. At the time. He was on our show, an independent economist and senior fellow at the Turner center for housing innovation at the University of California, Berkeley. Wow, a lot of Central planners there at Berkeley. That’s my mom’s alma mater, Berkeley. And my mom said lou dobbs was a socialist when I quote, my absolute love for his book war on the middle class. Great book, you must read that book war on the middle class. You obviously know the article does not say this, right. Okay. My mom went to Berkeley in the 60s and says Lou Jo, Lou Dobbs is a socialist. Mom, I don’t know where you get that. But whatever. Okay, we’re still seeing relatively few first time homebuyers because young people are buying homes later than they used to some of this long term shift toward marrying, and having children later in life. Hey, I talked about that on a recent episode about the how maybe it’s actually better to have kids later. Oddly, counterintuitive, right? But that’s why I talked about that article because you can’t hear the dogs that don’t bark most of the time, right? The profound impact of things unseen. Some of this back to the article, Jason, some of this is that the recovery has been slow among young adults. Most Millennials are still on the young side. For homeownership in Now, remember the millennial generation the Gen Y cohort, can be segmented up to right into the older and the younger of that time. The graphic cohort, the largest cohort in American history, almost 80 million strong, bigger than the baby boomers. I know we have many baby boomers listening. But Gen Y is actually a bigger generation and look at how your generation changed the world, change the country for sure, but even change the world dramatically, while Gen Y is going to change it even more in completely different ways, because they are saddled with huge debt in terms of student loans, not dischargeable in bankruptcy, no second chance debt slave for life. They’ve got a whole different mentality. They saw their parents get burned in the housing market and their very formative years. They like the sharing economy. They’re used to Uber, they’re used to Airbnb, they’re used to Lyft. They’re used to all of these sharing economy type concepts. They like portability, it’s just a different world for them, okay? It’s just a completely different world. So this may be because renting is so expensive, and because the expected migration of babies Baby Boomers from their larger houses in the suburbs to rental homes has been slow to take off due to the recent recession and historic crash and home prices. Well, you know, a lot of those prices, they’ve really come back in a lot of places, pretty much to the same level almost. I mean, that’s we’re not too far off from where we were before in many, you know, it depends on the price segment depends on the geography too long a concept to discuss right now.

But yeah, you know, that’s what Harry dent predicted. And he’s been largely wrong about that, by the way, Harry dent, huge fan of his work. He’s been on the show many times, as you know, but he’s been largely wrong about the bust in the mcmansions. And his latest book, I think it’s his latest at least unless he’s he pops out a lot of books. So maybe I’m not up on his latest but the demographic Cliff a fascinating book, and he talks about the real estate crash coming up and he’s the he is not called Right at all. So maybe he’s going to be 10 years behind the curve in that I don’t know we will see. But again, a different subject. Okay, finishing the article here, household formation is now increasing, but two thirds of it is on the renter side. Yay investors today think about that. household formation is now increasing. Okay. But literally two thirds 66% of it is in the rental market. In other words, these people forming households, two thirds of them are renters. They’re not buying this is it’s it’s an amazing time to be alive. But it’s an even more amazing time to be a real estate investor.

Yeah, who just one third of new households were owner occupied homes. homeownership is highest in the Midwest. Well Remember when CONSUELO MACK was on the show? And Meredith Whitney, and we talked about how they feel that the Midwest is their favorite emerging market? As if it’s a country the way they say that. But yeah, we’re doing a lot of business in the Midwest for sure. And you know, I’m doing a 1031 exchange right now I’m deciding where I’m going to buy Am I going to buy in Ohio? Am I going to buy in Memphis again? Am I going to buy in Chicago? I don’t know. I’m gonna buy a couple, three more houses. We’ll see. homeownership rate is highest in the Midwest, where houses are cheapest. And its lowest in the west where houses are most pricey. And by the way, that makes total sense. Those people must be listening to my podcast, because in those pricey markets, you’re much better off being a renter. Okay. Hey, if you haven’t yet, and many of you have and thank you, we appreciate your business. We appreciate you buying our stuff. So Hartman education.com. We’ve got that sale, a little less than two weeks. To go Hartman education comm you can get a bundle of the online courses for meet the Masters, the last two of them both this years and the prior years. And you get Jason Hartman University Jq all bundled in at a spectacular sales price. absolutely spectacular deal. So take advantage of that. Because time is limited false scarcity, absolute BS in terms of all those internet marketers that say, Oh, it’s a limited time offer, but yet it’s a digital product. You could sell it a billion times. Yes, I could, too. But hey, you got to have some incentive, right? And if that’ll make you get off the dime, and buy those very excellent products, then that’s what I’m going to do. I’m going to use that same false scarcity idea. We don’t do that with real estate though because real estate really is scarce. In fact, Let me just tell you two things before we get to our guests today and talk about the Cincinnati while the Greater Cincinnati market where we have a property tour coming up and you should register and join us for that. Jason Hartman, calm click on the events section, you got early bird pricing on that. But two things number one, one of our clients recently kind of talked one of our other clients out of buying a property. And he said, Hey, I didn’t mean to rain on your parade. And I said, don’t worry about it. Because those properties that this one guy was thinking of buying, they will sell to somebody else. There is no problem with selling properties. Now Now granted, if it was back in the doldrums if it was 2008 2009 Yes, I’d be upset that you talk the guy out of buying, but not anymore because the the challenge now is getting inventory The inventory sells almost all of it sells. And if it doesn’t sell it’s, it’s not a good deal. So that’s fine. We don’t want that. We don’t want the bad deals to sell to our clients. And then someone else asked me, Hey, you know, if I buy a whole bunch of properties, will you give me a better deal? And if I if if you buy a whole bunch of properties, you’re just taking inventory away from our other customers that will buy them anyway. So I’d love to say yes, bulk discount, you know, if you want to buy 40 properties, but it doesn’t matter because real estate has a built in scarcity. That’s why it’s so valuable, as what was it well, Rogers or Mark Twain or someone like that, not through like each other, but said, buy land, they’re not making any more of it. But you know, when you combine it with my packaged commodities investing concept, it’s really, really something. So check out the great properties at Jason Hartman calm in the Properties section, you’ll love them, they’ll pretty much all be gone. Before you know it. Our Ohio provider has agreed and you’re going to hear from her in just a moment. She’s agreed to hold some properties back for our upcoming tour. We always have to do this for our property tours. Join us for that because you’ll get the creating wealth in today’s economy seminar, as well as the property tour. Great time a lot of you have registered, I hope to see a lot more of you there. And check out Hartman education comm for our really big sale. And let’s go to our Cincinnati, Ohio market profile.

Hey, listeners, I know you’ve heard me talk a lot about one of our fantastic managers. You know, you’ve heard me say many times, I would rather have in a team and a B market than an a market and a B team any day and I used to sort of consider this market. A B market but it’s gotten quite a bit better recently in the last couple of years. And we’ve been in it for maybe three years now. And that is the Cincinnati Dayton metro area, you know, you know, Ohio. Now there are still some very blighted areas of Ohio, that we are not recommending. But we’ve got some good stuff here. We’ve talked about it before, but with our upcoming property tour, I thought we’d get our local market specialist back on to talk about that. And you’re gonna learn some stuff about property management during this interview. So even if you’re thinking, you know, I’ve got I’ve got the three to five markets that Jason always recommends. See, isn’t that weird? I talked about myself in the third person. Yeah, I know. That’s terrible. That guy Jason is always recommending diversify in three to five markets. Even if you’re already diversified enough. You will want to hear this interview because our LMS in this market is very good at property management. So let’s dive in. How are we doing? In the Cincinnati Dayton Metroplex nowadays,

Local Market Specialist 24:03
we’re growing like crazy. So it’s really exciting right now.

Jason Hartman 24:06
Well, that’s good to hear. Nope. So, you know, this has sort of been considered, over the years, many areas of Ohio have been considered kind of blighted and, you know, certainly not as bad as Michigan. That’s really a tough one there. And especially in the Detroit area, of course, but other areas of Michigan too, sometimes. And we’ve done some very successful business in the Grand Rapids metro area that’s been really good for us. So that’s kind of surprised me as well. I just financed a property in Kalamazoo, Michigan. You know, there really is a place called Kalamazoo. And so some of these markets are becoming pretty attractive. Now. What What do you tribute that? I mean, has the government become more business friendly or what’s what’s going on?

Local Market Specialist 24:51
I think that governments have definitely become more business friendly, and specifically the unincorporated areas, Ohio still has a lot of areas that are considered townships which are not cities, which have some very fair, favorable tax benefits. For example, the Westchester Liberty township area, which is one of our fastest growing areas, has had GE Aviation move in over 2000 employees into their new location inside of Butler County. And they did that and left Cincinnati and a couple of other markets because of this paper bill tax situations.

Jason Hartman 25:25
Mm hmm. No, good. Okay. So, Butler County is one of the areas you like quite a bit, although you do go a little bit outside of it in different directions, especially north of it. Why is that so special? Well,

Local Market Specialist 25:39
for many years, everyone’s been moving to the suburbs. And Butler County is really a suburb to two large cities. On the south side. It’s a suburb to Cincinnati and on the north side, it’s a suburb to Dayton. And people like the wide open spaces, the good schools, the great places to go out to eat but many times they’ll work in the city. And it’s 70 miles from the north end of the county to Dayton. And about the same 17 miles to Cincinnati, and Ohio, that’s a 20 or 25 minute commute because traffic isn’t as horrific as it is in some areas. So it’s a very reasonable commute in people like having more room to move around. That growing population is another thing that makes it attractive for investors and for tenants will talk to us about the tenant

Jason Hartman 26:27
who is that target tenant in your properties.

Local Market Specialist 26:31
Typically, in our B class properties, we’re looking at someone that has a two year degree or better. That’s very median income. The median sales price of homes in Butler County is about 120,000. It goes up or down depending on which end of the county you’re in. But at that price, you know, that’s a $700 a month mortgage or 995 to 1095, and a rental payment. So that’s very reasonable and very close to that 1% rule.

Jason Hartman 27:00
To find a, b, and c in terms of price range, and I mean, of course listeners, you need to understand this is somewhat subjective. There’s no question about it. You can’t, the houses don’t come with labels A, B and C. Yeah. That’s, that’s not like in the paperwork, okay? But define that if you can for the listeners and define those A, B and C level prices in your markets and tell us if you have a favorite

Local Market Specialist 27:25
Sure, I think in our marketplace, and a 50 to $80,000. Home is typically a C class property, a B class property depending on which city you’re in, because of course, some cities have higher median income. So those homes are a little more expensive, but a medium be priced home is 80 to 120, or 80 to 140. And then an A class property is always 140 or above. So each of those homes kind of have a plus and a minus. Of course you’re a class homes have tendency to have greater appreciation. But remember, Ohio is a millennial market and you can’t eat appreciation. My favorite is a combination of the B’s and C’s. And then if you’re buying 10 homes that I think everyone should have an A class property. So my choice would be to seize six or seven B class properties and then one a class property on the end.

Jason Hartman 28:22
Okay. All right. So you define that right in the same market have, I talked about diversification in the three to five metro areas. So if yours yours would be counted as one metro area and Memphis would be another Atlanta would be another, Indianapolis would be at another, but you say right within your area, people should diversify into different classes of property. Hmm.

Local Market Specialist 28:45
I think so. And those were my recession lessons that when we saw people starting to move and downsize, they did that at different times. For example, your C class properties which were your tenants that probably had this one a savings account, those went vacant. First, your B class properties that took six months to a year before the recession really hit them, they were a little more responsible had a little larger savings accounts. And our a class properties. It was almost three years into the recession before we saw those even hitting the market as far as foreclosures, because many of those people had either decided to sell and or moved out of the home and and gave it back to the bank before the recession hit them the hardest. So by diversifying your portfolio within either your marketplace or your price ranges, then if another recession would happen to hit, you have a little more diversity.

Jason Hartman 29:42
Yeah, right. Right. Okay. And so those different classes of workers will get may affect it in different ways, or I should say laid off in different I mean, that’s the idea behind it. Right, exactly. Okay. Well, I want to circle back to a little bit more about yourself. Marking the major employers and all that good stuff. But our clients over the years have been impressed with your property management. And we’ve had many clients buy in your market. Tell us some of your your best practices for property management,

Local Market Specialist 30:15
I think your single best is your application, because we call that the honeymoon period, when you’re on a honeymoon, a tenant will give you or a potential tenant will give you all the information that you could possibly ask for. And you may not think you need all of that information today. But if the tenant starts falling behind, it’s always nice to have mom’s phone number if they’re a younger tenant, because they really don’t want mom to be called twice, so they become more responsible. And we’ve found that by asking a lot of questions, and then verifying all that information on the application really starts off the relationship, right? If we can screen the tenants to where we have weeded out anyone that has had a bad history, then we don’t have to worry about that. In the future of them repeating that history, because we know people have tendency to repeat that habits.

Jason Hartman 31:05
Mm hmm. Yep, that is true. no guarantee of future results. But you know, the past what else? Can you go by type of thing? Yeah. Got it. What else on management,

Local Market Specialist 31:16
I think holding them very accountable. We have a very strict policy rents due on the first light on the fifth eviction notice on the sixth 100% of the time, and that doesn’t mean we’re going to evict the tenant, it means that we’re telling them that they’re on notice that if they don’t pay, that they will be evicted. And by the first month that they’re late by starting that process with them, then they know you’re serious. You’re not mom and pop that’s just going to forget about it. They have to pay their rent every month on time. And then we will take their money up until the time of the set out because we don’t want the property to be vacant. And we want them to learn their lesson but absolutely holding them accountable by walking through that eviction process very quickly. teaches them that they have To chaos first,

Jason Hartman 32:01
what else though in terms of that, I mean, the reason I’m kind of, I mean, all property managers will say that they’ll all come on the show and say, well, you you got to be firm with your tenants, you got to teach them that they need to pay the rent, etc, etc. You know, of course, where everybody agrees with that. But it doesn’t always happen in practice. Why doesn’t it happen? Why is it so frustrating for some?

Local Market Specialist 32:24
I think they don’t communicate. And today, we use a program called AppFolio to communicate with our tenants, which allows us to text them, email them, call them by telephone, and do electronic billing, which you have to keep up with what the current trends are. On the other side, we still mail we do snail mail, to the people that don’t have access to email because we know that they’re in a different class of people. I think the other thing that attracts the best tenants is to make sure that you have the best looking property when you put it on the market. And that means it’s clean, it’s fresh, it’s painted It looks nice, it smells nice. Because if you put a stinky ugly property on the market, you’re going to get a stinky, ugly person that’s willing to take it. So we try to make ours the shiny Penny, the prettiest one on the market to attract the right kind of tenant. I think that’s really the first step.

Jason Hartman 33:15
Okay, anything more you want people to know about management before we kind of circle back to the market and talk about some of the big employers and so forth.

Local Market Specialist 33:23
I think that, you know, looking at longevity of tenants, our average life right now is about 3.4 years. And we spend a lot of time identifying what’s going to the asking the next question that says, what would make you want to stay in our property longer. And we’ve been very successful this year with asking tenants to go from a one year lease to a two year lease. And a one year lease is our neighborhood normal and two years is not normal. But after they’ve been a tenant for a year and they’ve been consistently good. We’re asking them to then sign a two year lease which will extend the life of that tenant, which is really We’re all looking for we want people that move into the properties, pay their rent, and don’t move out and take care of it.

Jason Hartman 34:05
What do you think about rent increases, though? See, in the reason I asked this question is, some property managers say, Well, hey, we don’t we really minimize turnover. But if you don’t have some vacancy, you’re just not charging enough. Right? Would you agree with that philosophy? Or?

Local Market Specialist 34:23
I don’t, I don’t necessarily agree with that philosophy, because I know that a vacancy will cost you at least one month’s rent, if not two in a year. And if you can extend that over three to four years, then at five years, you may want to ask yourself that question, but keeping that property occupied for at least the first three to four years, I think is important to your cash flow. And if you raise the rent 10 to $20 a month, it’s not going to make up for that month, a vacancy that you’re going to have when the tenant turns over,

Jason Hartman 34:54
no rent increases or every couple of years. I mean, We’d like to see our clients get a Performa rent increase. So you know if they can raise the rent 4% annually on average, I think that’s pretty great.

Local Market Specialist 35:09
I think you have to absolutely look at it. And we look at it by demand in that marketplace. You know, if and what is currently available in the marketplace at that time, if we have a flood in one neighborhood vacancies, then we’re not going to raise the rent in that specific neighborhood. If we’re renting very quickly in that neighborhood, then we’re going to look at raising the rents there, but we raise anywhere from 3% to 10%. Depending on the neighborhood,

Jason Hartman 35:36
can you raise 10% and keep the tenant or you’re retaining at that point? I mean, I can’t imagine most tenants are gonna do a 10% increase.

Local Market Specialist 35:44
It depends on when they rented the property. You know, if they’ve been in the property for a number of years and haven’t had an increase, then that’s very normal for them. Hmm,

Jason Hartman 35:53
yeah. Okay. We’re really working. Tell us about this, this sort of typical tenant.

Local Market Specialist 35:59
Well, when we were Talking about that median income. We’re looking at a lot of teachers, nurses, government services workers. Some of our largest employers are Cincinnati Financial Corporation, GE Aviation, the larger school districts. We have Miami University and Oxford, which is a very large school that employs a little over 3000. So there’s and then there’s the healthcare, which is absolutely exploding in our county right now. Because in the last 30 years, hospitals were all built in the old downtown areas. So with the shifts of population to the counties, to those suburbs. Now, the hospitals are all moving out here. So we’re seeing a huge surge, and employment and that’s everything from the cleaning people to the doctors and nurses.

Jason Hartman 36:49
Okay, so healthcare workers, that’s good, that’s stable, it’s in demand. What else should people know about that target tenant?

Local Market Specialist 36:57
We have a large steel manufacturing firm. called aka steel that employs a little over 2400 in Middletown, aka steel is the largest steel rolling mill in the nation today, and is a fortune 500 company. You know, many times we look at manufacturing, we think, Oh, this is the rust belt, but AK steel is a fortune 500 company. So it’s not quite that old rust belt that many people thought of. Mm

Jason Hartman 37:21
hmm. Okay. And then are they those people are running C and B class properties probably most of the time, right?

Local Market Specialist 37:28
Actually, they’re A and B class properties because the steel workers make 70 to $90,000 a year so

Jason Hartman 37:34
Oh, counterintuitive. Ah, okay. What else we

Local Market Specialist 37:38
have an Ikea in Westchester. And Westchester is one of our growing areas again, because of it being a township. And we’ve just recently opened the Liberty center which is the area that the property tour is going to be in the Liberty center over the next year is going to employ over 3000 people. That is everything from hotel workers to foodservice. It’s one of those live work, eat places where there’s everything in one spot.

Jason Hartman 38:06
Right, right. And I love that, you know, when you sent over the pictures of the hotel and everything, I thought, wow, this is nice.

Local Market Specialist 38:13
It’s only been open for about eight weeks now. So you’re going, it’s really going to be nice,

Jason Hartman 38:19
good. Well, let’s talk a little bit about the property tour and what you have planned for us. As soon as it gets a little closer, you’ll be holding some inventory back for our tour attendees. One of the problems we commonly run into on tours is we don’t have enough inventory of properties for people to purchase. It’s a good problem to have, but it is a problem nonetheless. I mean, it’s a good problem for us to have may not be seen as good for the customers. We want people to have a decent selection of properties. So talk to us about inventory and kind of what areas we’re going to see and and then we’re having dinner at your beautiful home on Saturday. I can’t wait.

Local Market Specialist 38:56
Yes we are. That’ll give us a chance to socialize. To meet all of our team, because many times when I’m out, especially at your group, it’s only myself and maybe one other person. Most of our management team will be at the dinner. So they’ll have a chance to meet everyone that makes the process work from the project managers that work the rehab to the property managers that are ultimately those people that make you continue to get money every month. And then, we’re going to start at the Liberty center. And I know we have some great education planned, and a break for a fabulous launch. And then we’re going to get on the tour bus. We’re going to see at least six properties. We’re going to look at the A, B and C class homes, so you can see all what the differences is. differences are and then we’re going to look at them in a couple different phases of rehab. We’ll probably see one stinky one that makes you know why we work so hard to make them nice. Some that’s in the middle of rehab so you can see what’s actually going on the detail in the rehab. We, we do, and then we’re going to see a number of finished homes that will be available for you. available for your customers only.

Jason Hartman 40:08
Okay, okay, good. Good stuff. Okay. Well, any other thoughts you want to talk about about your market as we wrap it up?

Local Market Specialist 40:16
No, I think we’ve covered all the great things. I mean, the growing population is important because you want your rental property to be in demand. We have extremely low unemployment. And I’ve always had that throughout the recession. We’re right at 4% right now. And you know, the demand for rental properties.

Jason Hartman 40:33
It’s basically full employment. Yeah,

Local Market Specialist 40:35
yes. Absolutely. And that means your rental properties are full and in demand, and that’s what we want people that can pay.

Jason Hartman 40:43
Yeah, good stuff. Good stuff. Okay. And the property tour, go to Jason hartman.com. That way you need to fly in on Friday, June 3. You can either fly out Sunday night, June 5, or Monday the sixth. We’re gonna have a great time you’ll get the hotel booking. Link after you, you book and we have a discounted room rate their beautiful hotel like you said it’s only eight weeks old as of as of now. It’s 125 per night, I believe was that the rate? That’s correct. Yeah, good, good stuff. I’m sure you’ll have a fun time. One of the best things I love about these property tours is getting to share so much knowledge with our attendees. You know, we learn from our clients, you guys teach us a lot of stuff. It’s our job to sort of assimilate that and then feed it back to all the other clients. I just love doing that and we could have so many meals together. We’ll be having three meals together on Saturday and two meals together on Sunday. So it should be a fantastic property tour. And I’m just looking forward to seeing everybody there. Go to Jason Hartman calm, click on the event section. At this point based on registrants, we still have early bird pricing. But the price goes up is when we have more registrations and as the event draws near, so register as quickly as possible, and we look forward to seeing you on Saturday morning, June 4 at our Cincinnati area property tour. It’s gonna be a great time. Thanks for joining us.

Announcer 42:13
I’ve never really thought of Jason as subversive, but I just found out that’s what Wall Street considers him to be. Really now How is that possible at all? Simple. Wall Street believes that real estate investors are dangerous to their schemes? Because the dirty truth about income property is that it actually works in real life. I know I mean, how many people do you know not including insiders who created wealth with stocks, bonds and mutual funds? those options are for people who only want to pretend they’re getting ahead. Stocks and other non direct traded assets are a losing game for most people. The typical scenario is you make a little you lose a little and spin your wheels for decades. That’s because the corporate crooks running the stock and bond investing game will also See to it that they win. This means unless you’re one of them, you will not win. And unluckily for wall street. Jason has a unique ability to make the everyday person understand investing the way it should be. He shows them a world where anything less than than a 26% annual return is disappointing. Yep. And that’s why Jason offers a one book set on creating wealth that comes with 20 digital download audios. He shows us how we can be excited about these scary times and exploit the incredible opportunities this present economy has afforded us. We can pick local markets, untouched by the economic downturn, exploited packaged commodities investing and achieve exceptional returns safely and securely. I like how he teaches you how to protect the equity in your home before it disappears and how to outsource your debt obligations to the government. And this set of advanced strategies for wealth creation is being offered for only 197 dollars to get you’re creating wealth encyclopedia book one complete with over 20 hours of audio go to Jason hartman.com forward slash store. If you want to be able to sit back and collect checks every month, just like a banker Jason’s creating wealth encyclopedia series is for you.

This show is produced by the Hartman media company All rights reserved for distribution or publication rights and media interviews, please visit www dot Hartman media.com or email media at Hartman media.com. Nothing on this show should be considered specific personal or professional advice. Please consult an appropriate tax legal real estate or business professional for individualized advice. opinions of guests are their own. And the host is acting on behalf of Platinum properties, investor network, Inc. exclusively.


Today’s guest is Greg Saylor, a corporate software engineer who listened to the Creating Wealth Podcast. He now has six income properties earning him $4000 in monthly income. Greg shares what got him started in real estate investing and the details of his first income property deal, including the flaws. They also talk about property taxes, debt to income ratio, planning for additional expenses, and having a reserve fund.

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 0:12
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 1:03
Welcome to the show. This is your host Jason Hartman episode number 665 665. And today we’ve got a great show for you. We’re going to have a client case study. Yes, it’s our client, Greg Saylor, who purchased six properties in six months, six in six. And I think you’ll really like his story, six properties in rapid succession. And he’s doing great with him and you’re going to hear firsthand his story of how he looked at alternatives and came to real estate, because it is the most historically proven wealth creator in the entire world period. There’s nothing this good. I mean, everybody has access to it. It’s just it’s just such a great thing. So a couple things before that. I want to make sure listeners that you have made our Relationship official Yeah, are we go and study, I hope so, what you need to do is make sure you press that subscribe button in iTunes or whatever podcast platform you’re using. To make sure you do not miss any episodes. We’re coming at you three times a week, every Monday, Wednesday and Friday. And occasionally, we might slip a little announcement in there on a an alternate days, so you don’t want to miss any of that stuff. We got some great stuff coming up for you been doing a lot of good interviews. I did one today that I think you’ll like and just a lot of a lot of good things coming up. I gotta get the schedule all outlined for our upcoming episodes as we move toward episode number 700. Whoo. That’s a big deal. 700 Wow, we’re getting up there. And remember, overall, I’ve got about 3000 podcast episodes out there with all of my other shows. You know, I rarely mentioned these others. shows, so of course the longevity and biohacking show the jetsetter travel show. on that show we talk about expat living. We talk about all kinds of interesting stuff, offshore investing, which ain’t so great tell you the truth. I’ve certainly looked at that up, down sideways. And we’ve just never found anything internationally. That makes as much sense here as it does in the good old US of A Gosh, holistic survival show. If you’re feeling depressed, do not listen to that show, because it might push over the edge. It’s definitely not the optimistic stuff. But you know, there’s two sides of the brain. We’re all we all have a positive and negative side, right? I was gonna say we’re all bipolar. No, unfortunately, we’re not all that. But we all we all have ups and downs. We all think of the positive and the negative. And it’s interesting. I’ve been reading this book, and it talks about what I’ve talked about on the show before many times, which is that constant Have What will you do more for Will you do more and this is such an important part of how we think as humans and how we invest as real estate investors. Because what will you do more for? Will you do more to go and earn 2535 4045 even percent on your on your money by investing it in income property the most historically proven asset class or will you do more to save some money? Will you do more to avoid loss or to gain something? What is the stronger motivator in our psychology Well, since we have been conditioned by aeons of scarcity, our mentality is always to preserve, to conserve, that is the that is the way we operate in fact, I was reading another book and I can’t remember they they use a funny phrase. Oh yeah, here it is. Cognitive misers. Yes, we are cognitive misers. So even with our own brainpower, we can serve. Because, interestingly, the brain compared to the rest of our body doesn’t weigh very much. But you know, it takes like 20 or 30% of the energy that your body uses. That’s pretty amazing. If you think about it, our brain is very greedy when it comes to energy. And if you think about it, we’re kind of lazy as people. I mean, that’s just the general propensity of of all of us. I think, I mean, I get I’m certainly get this way. I hope you share that with me and you do.

Jason Hartman 5:53
I hope it’s not just me, I guess I’ll say, but we don’t want to make a big effort to think Earl Nightingale used to say that will Go around when we have a problem last are neighbors what to do our families what to do our parents or children or uncles or cousins? You know we’ll look at our horoscope we’ll do everything. But the last thing we’ll do is sit down and he said, with a pen and paper and actually think the problem through, right? actually think the problem through and that’s because of this propensity to conserve, to conserve our energy to conserve even our thought energy. We are cognitive misers. That’s what the that’s what the experts say. And I was gonna say that’s what the psychologists say, but I don’t know if it’s a psychologist or a biologist or a physiology. I don’t know. I don’t know exactly what experts said that But some experts said it Trust me. Oh, anyway, so so we will do more to avoid loss than to gain insights. Certainly I noticed this in my own behavior all the time. For example, when I shop for clothing, one of my favorite places is Nordstrom Rack. I think Nordstrom Rack is a pretty great deal. And it’s funny. It’s just funny. Yeah, this is, I mean, time is money. And we will search around online and look for the best deal on something. But when it comes to desire for gain, because the gain is speculative, and the conservation is not it, that is also speculative, by the way, but it’s not as speculative is that as the possibility of gain. So we will take the old saying, a bird in the hand, is worth two in the bush, right? A bird in the hand is worth two in the bush. And so because we’ve had scarcity throughout our history as humans, we still think that is the world in which we Live, and it’s not we live in this world of massive abundance, even in bad times, even living under Obama anism. Yes, oh bomb unionism, slight communism, but it’s got a different flavor. What will they call it? If Bernie Sanders becomes president? Well, he’s probably not going to we’re either going to have a very weird, loud, boisterous guy, you know who I’m talking about Mr. T there, or we’re going to have the criminal known as Hillary Clinton. Yes. That will probably be our two choices. It’s always it’s always that we don’t really ever get a choice, do we? We always have to just vote for the Yep, you guessed it the lesser of two evils, right. So given that one, you know what my decision is going to be listeners. But again, certainly not my favorite. My favorite was discovered FIDE A long time ago, and that was Mr. Rand Paul, of course, Ben Carson, us and kind of an interesting guy. We had him on the show before. We’ve had quite a few presidential candidates Austin Peterson, the Libertarian candidate, john McAfee, of course, another Libertarian Party candidate for President. I don’t know who’s leading. I mean, Rand Paul endorsed john McAfee, on the Libertarian Party side. I don’t know we’ll see who’s living. One of our clients said a great thing to me today. She’s so funny. I just cracked up when I heard her say this. We were boxing back and forth. Yes, that’s you, Michelle. And she says, it gets lonely being libertarian in the San Francisco Bay Area. That was the funniest stay.

Oh, God, she really made me laugh on that one. But yes, it does get lonely being a libertarian sometimes, but I tell you, it is rising that ideology, I’d say probably has a stronger foothold. than it has at any time in my lifetime, at least I would say that Ron Paul, Rand Paul, Ron Paul, the father, of course, he was surprisingly popular with Generation Y with the millennial generation. Now, hey, you know, folks, we’ve talked a lot about Gen Y, by the way, and the fact that they’re going to make great renters they’re going to be renting for a long time. This is the reason why we’re seeing such strong rental demand, virtually everywhere in the country in virtually every market. We did a call today with our local market specialists, not all of them, but most of them. We had about 25 people on the line. And we were talking with our different teams in Indianapolis and Memphis just all over the place, you know, all our different markets, right? I don’t need to explain Little Rock, Arkansas, etc, etc. So anyway, we had them all on conference call today. And the first thing I did is I went around the virtual room. And I asked them all what was going on. And without Well, I actually cannot say in all fairness without exception, because there was one exception.

Virtually all of them 2424 out of 25 said, inventory shortage, really tough to get good inventory battling to get inventory, way more buyers than sellers, etc, etc. One of them said they weren’t having too much of a challenge with inventory. So kind of interesting there as we went around. Jason, what was your point? You’ve gone all over the board. Presidential candidates, there’s no choice. Lonely libertarians in Northern California. That’s kind of like being Sleepless in Seattle. Inventory shortages. I don’t know what was my point? Maybe someone can write me and remind me and I’ll talk about it on the next episode after flashback Friday, of course. So, a couple things, make sure you subscribe to the podcast. We so much appreciate your reviews of the podcast on iTunes or Stitcher, radio, whatever your podcast platform is, go and review the show, make sure you’re subscribed so you don’t miss any important episodes. And we very much appreciate your ratings, your reviews, and telling your friends about the show to spread the word so they can join us as we get toward episode number 700. We got a big sale going on. Before we get to our guests here. I want to tell you about this because we just launched it and you probably haven’t. Now, here’s the thing at Hartman education comm our new little website Hartman education.com just my last name, education comm Hartman education comm we used to just have one point There. Now we have three Yes, we have the meet the masters from 2015, the meet the masters from 2016. And the first ever j h you live or Jason Hartman university course, from San Diego. Now I know a lot of you listening have attended all of these events, right? So if you’d like to get a copy of the video or the audio download, look people I know that you don’t always need to see this stuff. Sometimes you want to download the audio have it with you so it’s portable. And then if there’s something in there that strikes your interest, or the speaker mentions a visual aid, and you want to see that, then you can just go back to a very well organized portal with these three courses. And you can log in and you can watch the video at your convenience. So super handy course. I’m really happy. This is the first time we’ve had these all online. And we are kicking it off with a big huge sale. Yes, a big sale. So normally, each of the meet the Masters courses are 497 apiece. And the Jq live is 297. But bundled together, we normally sell this for 1197, which is basically 100 bucks off, it would normally be what 1291 all together, but for a limited time. What will be the limitation here? See, when you’re in the marketing world, you got to create this false sense of scarcity. And folks, let me tell you, this is complete bullshit. Oh, Doc, you’re not supposed to swear on this show. It’s complete BS. You know, I’m a little punchy here or not. It’s it’s the end of the day. had a big day here. So Yes, you’re not supposed to swear on the show. We are a clean family friendly show here. So Well, most of the time, anyway. And normally These are 1291 if you buy them separate 1197 if you buy them together, but for a limited time, because we got to have some urgency, we got to create urgency, right? Otherwise, you’re never going to get off the dime and make a decision. So what is the limited time gonna be for a limited time? What should be the time limit for this sale?

Oh, yes, shut that thing. Okay. That just goes on way too long, doesn’t it? How about if we say for the next week? Yes, one week sale on this? Well, maybe we’re better make it a little longer. Because what if you’re not What if you’re not caught up on your episodes and you haven’t listened to them all? Let’s make it. Let’s make it two weeks. Let’s make it a two week sale. Okay? For two weeks, you can get all three of these for only 797. And that my friends, is a great deal 797 all three courses, audio and video beautifully well organized. We got a great little online university sort of website for that. So check it out. Take advantage of that. Hartman education comm also we’ve got our Ohio property tour and creating wealth seminar coming up. That’s going to be fantastic Cincinnati area, Jason hartman.com. Click on events, check out the details for that and join us a bunch of you have already so we’re looking forward to seeing you there. And that is coming up in early June. So check that out. Without further ado, let’s get to our guest a client case studies Six properties in six short months with Greg Saylor. It’s my pleasure to welcome a another case study a case study from one of our wonderful clients. We love hearing from you. And we would appreciate having any of you on the show. Let us know if you’re interested in being on and sharing your story. This is where the rubber meets the road. These real stories from clients really inspire our listeners. It’s my pleasure to welcome Greg Saylor. Now, let me tell you a little bit about Greg. He is a software engineer. He’s in the cybersecurity field for big corporate enterprise applications. And he started investing with us just about five months ago. So he’s pretty new at this and we love to hear from investors at all levels, even investors who haven’t started their journey yet. Once in a while that’s really interesting, or maybe they just started or they’re just a few months in like Greg or there’s several years in and they’re veteran And investors and they can tell us the good, the bad and the ugly about investing.

So let’s just dive into it and welcome Greg Saylor. Greg, how are you?

Greg Saylor 18:09
I’m doing really well. Jason, thank you so much for inviting me on the podcast.

Jason Hartman 18:14
It’s good to have you and you are closing on your sixth property. That’s you’ll have a six pack next week, right?

Greg Saylor 18:21
That’s right.

Greg Saylor 18:23
Yeah, I’m really happy about that. I couldn’t, couldn’t be happier with how things are going good,

Jason Hartman 18:28
good stuff. Well, it’s new. So there will be bumps in the road and problems. I’m just gonna warn you. It’s not all roses, but I’m glad to hear. It’s all going well, it’s mostly roses most of the time. So first of all, what got you interested in real estate investing? I mean, I’m sure over the course of your life, you’ve you’ve done and tried a bunch of things, maybe stocks, maybe maybe you work for a publicly traded company and you have stock in that company? I don’t know. But what’s the interest with real estate?

Greg Saylor 18:57
Well, actually, I do work for a publicly traded company. Right now, but I’ve never really done much investing. I mean, the 401 k thing. I did try to trade stocks a few times, and quickly discovered that when it comes to trying to time things, I’m just not good at it. And I can’t. Some people might have that skill. It’s not one that I possess. And the other thing, I guess, I’ve always had an interest in real estate. It seems like I think everybody says that, but you know, it’s always I’ve always just been fascinated by it as kind of a necessary human need, you know, and we’ve moved around a lot when I was a kid. So I never really had, I guess, a kind of a stable place to live. I, my mom, you know, tried to buy a house at one point and succeeded at that, but then we lost it. And so it’s just kind of always been sitting back there that this made sense, but I didn’t know how to make it work. You know, that’s kind of where I came from? And I said success in anything else, you know?

Jason Hartman 20:03
Well, well, let me first tell you, Greg, I, you mentioned that when you were referring to the stock market, that you weren’t good at timing, and just to make you feel better, nobody’s good at timing, no matter what they tell you. And here’s how you know, all of these fund managers, all of these different mutual funds, and I don’t just mean fund managers out of mutual funds. All of these different advisors, there have been numerous surveys on them, that by and large, none of them beat the index funds. So they’re, they charge big management fees. And you can pretty much get the same result. It’s been this has been this has been documented over and over for decades, okay, and you’ve probably heard this stuff, you can get the same result by just buying that index just by the s&p 500. If you’re into stocks in the first place, and I think stocks suck, you know that it’s the modern version of organized crime. But don’t feel bad if you say you can’t time the market because nobody can. The people that do it full time that made it have made a career out of it can’t time the market either.

Greg Saylor 21:09
Yeah. And then you have all these shenanigans that are going on behind the scenes in the stock market to probably have a whole many our discussion around some experiences I’ve had with that. But you’re exactly right. I finally just put my 401k into the total market index fund. And I think it’s good to have that. But I started investing in real estate, you know, last November, in the stock market, I managed to lose about $20,000 between November and December. So,

Jason Hartman 21:41
yeah, you could with $20,000. As you now know, having purchased six properties, you could buy another property. Exactly right.

Greg Saylor 21:48
And, you know, I, yeah, that’s it. I mean, I like cash flow. I think cash flow is really, really compelling. Because I just like everybody else, I can’t find the market. So why even try my perspective at this point?

Jason Hartman 22:08
Yeah, absolutely. But even if you could time the market, it doesn’t mean that you’ll win the game, but doesn’t mean that you outperform good solid income property investments anyway. So yeah, very, very good points. Okay. So Greg, tell us what you did when you started getting interested in real estate investing? Because you knew you could you could do better there than you could in the stock market. What do you do first,

Greg Saylor 22:33
I kind of knew I started looking around locally in California. And it was sort of, I guess, the same sort of general direction that I took when I bought my property, which is I started looking for properties that seemed like they would make sense.

Jason Hartman 22:50
Now. Does that mean the house you live in?

Greg Saylor 22:52
Yeah, that’s right.

Jason Hartman 22:53
So you don’t you do own your own home. And just so the audience knows you live in the Bay Area, San Francisco Bay. Right, that is correct. Okay. And whereabouts Do you want to be more specific I mean, it’s a deal of in San Jose or where

Greg Saylor 23:06
I live in is up in the unincorporated part of Alameda County. And in Hayward, which is right about halfway between San Francisco and San Jose, or kind of near Oakland on the East Bay. But that’s so when I was looking at buying a property. Of course, I was living in San Francisco at the time. And I just started, you know, expanding my search until I found a property that had the amount of land that I wanted, that was something I could afford, that I liked, and that put me into Hayward. So as the same kind of thing with investment property, I started looking in areas I knew and I just kept expanding and getting bigger and bigger, bigger. Finally, I realized I was up in Chico of all places, looking at you know, rental housing for college students. And I’m thinking I really want to get into that not really a and they didn’t even make that much sense. There’s like kind of subtle There has to be another way there has to be another way to invest in real estate. And that’s when I started listening to your podcast and a couple of other podcasts. And, you know, I knew it wasn’t gonna be California. I knew it had to be somewhere else. I just was trying to find a solution to that.

Jason Hartman 24:17
Right, right. And by the way, you know, there are no other podcasts on real estate investing to ever listen to. So, we are the only one.

Greg Saylor 24:27
Certainly my favorite.

Jason Hartman 24:28
I would like to think of that. It’s, it’s not true, unfortunately. But yeah, good stuff. So you started listening to the podcast, and when was that? I mean, your first purchases were in November of last year about five months ago. How long did it take? How long were you educating yourself listening to podcasts. And then before you did your first deal,

Greg Saylor 24:49
I would say about 45 days, but I listened to a lot of podcasts. I have quite a commute between my house and work. So I have, I’d say about two hours a day so about 10 hours a week. A listening to podcasts. So it, I got through quite a few of them pretty quickly. And then I called and left him a voicemail and Oliver called me back, we had a very nice conversation. And I just knew it was the way for me it made sense to me the investment vehicle makes sense. It’s not complicated. I mean, the transaction might be a little complicated, but the investment itself makes a lot of sense and seemed relatively simple, you know?

Jason Hartman 25:33
Yeah, yeah. And you know what, I’m so glad you mentioned that because I find that a lot of these different investment promoters out there who are promoting whatever type of investment, they hide things through complexity. And the world is not a really complex place, as it might appear on the outside, you know it. Sometimes the simple things just are the best I mean, the concept of just owning a property renting it to someone. I mean, there are things you have to know, no question about it. We saw a lot of time on this podcast talking about many different aspects of real estate investing. But overall, I mean, you don’t you don’t have to understand the Fibonacci curve, or all of these crazy things these Wall Street guys would have you understand, you know, some of these other investment schemes out there. It’s just, it’s just not really that complicated is that it’s just a simple workable thing. Right.

Greg Saylor 26:29
Yeah. I mean, there’s like the acquisition. I mean, there’s, you know, a number of players involved, of course. So it does get a little bit, you know, not I would say cumbersome, a little, you know, there’s movie pieces during the acquisition piece. But after that, you’re right. I mean, it’s, for me, it’s pretty straightforward. Yeah, they’re organized the tenant, the insurance, property management. That’s maintenance. What else is there? Really?

Jason Hartman 26:53
Yeah, you got about six components, I’d say you know, 567 components depending on how you look at it. Depending on whether or not you have a homeowner’s association, so there are a few moving parts, but it’s a really small number of moving parts in comparison. So what was your first property? Which, Which one did you buy first?

Greg Saylor 27:11
Yeah, let me add one more thing. And the other thing is that those moving parts are ones that I feel like I can have influence over. By Dolly my insurance carrier, I can go get a different one. I don’t like my property manager, I can get a different one. So I think that’s like, if I want to raise the rent, I can raise the rent. If I need to lower the rent, I can lower it. You know, it’s that having that flexibility in all the dimensions i think is a good thing.

Jason Hartman 27:36
Doesn’t it feel nice to be in control of your investments?

Greg Saylor 27:39
Yeah, it really does. Yeah,

Jason Hartman 27:40
it just makes such a difference. It really does. Yeah, good. Good stuff. Okay. So your first deal. Tell us about that.

Greg Saylor 27:47
It was in Indianapolis, it was a duplex. And actually, I had in mind that my first three properties are going to be duplexes because of the way that the lending, lending works as the first four properties that are duplexes are 25% down. And then after that, they go to 30%. So I kind of wanted all of my after for, of course, the single family homes go to 25%. And I just wanted to keep it putting 25% down on my properties. So I loaded up on the duplexes for the first three, because I have my primary home, which was number one, and then switch to single family homes.

Jason Hartman 28:26
So Indianapolis was one duplex or you bought a couple of them there.

Greg Saylor 28:31
I bought two in Indianapolis,

Jason Hartman 28:32
and where those new construction or resales

Greg Saylor 28:37
I’m sorry, do you mean like rehabbed or,

Jason Hartman 28:39
oh, no, what were they were they brand new or from a builder? Or were they, you know, rehab. I mean, all of our properties, pretty much our rehab. So that kind of goes without saying, but or were they resales where they already owned prior to you’re buying them?

Greg Saylor 28:53
Oh, I bought them from your network. From

Greg Saylor 28:58
yesterday, were rehabbed

Jason Hartman 29:00
Okay, good, good stuff. And so you’ve closed on those properties probably by now, I’m sure. And you’re closing on your sixth property next week. So tell us about the process of buying and, and how that all went and getting them closed and so forth.

Greg Saylor 29:16
Well, it was it was pretty smooth. I mean, I’ve I had some issues early on with, I was working with a lender that you guys did not recommend, or hadn’t recommended. And I didn’t like how that was going. So I asked Oliver, and he suggested some other folks that you guys recommended and that just went because greatly simplified everything.

Jason Hartman 29:43
What was what was the problem with the the first lender that you didn’t like so much?

Greg Saylor 29:47
It was just kind of a lack of communication, you know, as a new somebody new to investing. You know, I just didn’t know there’s a lot of questions out here. You’d have answered and I was not getting clear answers. You know, it could be me, you know, sometimes, you know, people could communicate differently. We were just not communicating well with them whether it was my fault, their fault? I don’t know. It just wasn’t a good. Sure.

Jason Hartman 30:18
Yeah, absolutely. And one of the things I say frequently is that investment property financing is a specialty. So going to the person that did the purchase of your home or the refinance on your home, it won’t necessarily work out very well. You really got to have someone who specializes in financing investment properties. It is a different thing, even though even though those investment properties are residential properties, in other words, they’re four units and under, it’s still a different deal. It’s really it really is a specialty we’ve, we’ve we’ve seen that all too many times over the years.

Greg Saylor 30:55
And actually, on that point, I know I’m reflecting back on this because it’s so new if you’d asked me this Two or three years from now, I probably would have completely forgotten about it. But at the same time, I was closing on two properties simultaneously those two duplexes actually holding on three properties simultaneously, I started three investment properties simultaneously, and decided to throw into the mix to refinance my primary residence. That was a mistake, because as soon as they were getting like close to ending the refinance my primary residence, all of a sudden on the soft credit pool, they saw the credit pool from another lender. So it was like, now they want documentation on all the investment properties I was buying. So it’s like

Greg Saylor 31:37
it was an interesting December was an interesting month. Yeah,

Jason Hartman 31:41
yeah. The stuff to do there. Definitely. Okay. So you got those properties financed in you got them closed. Tell us about whatever part you want about the property management about getting tenants, just whatever you’d like people to know.

Greg Saylor 31:58
Okay, so I guess I’m a software engineer. So I’m kind of a numbers guy. And, you know, I’m going to be looking at some of the things you call it property manager. I’m gonna be looking at that software soon. But you know, I started building these spreadsheets in the spreadsheet here has gotten bigger and bigger and bigger and it’s becoming increasingly difficult to track this but

Jason Hartman 32:20
yeah, use property tracker makes it so much easier. You’re not doing that yet. Hmm, not yet. Okay, that’s what I’m gonna bug you about. I want you to use that because you’re gonna find it’s so much easier to to keep track of your properties when you use that software.

Greg Saylor 32:37
Yeah, so I guess I’m kind of in I don’t want to say negative thinker, but I as my profession, I kind of look for problems. Right. So some of the i’d edited a couple of like minor snags along the way. And you know, don’t I’m not trying to be negative here, but the like on the I know,

Jason Hartman 32:58
we will listen we want it to be realistic? Like, yeah, one of the things we really try to do, Greg is, is provide real transparency. Other people out there will hide the flaws. Look at this is there are problems, I’ll be the first to tell anybody. It’s not perfect. But like Winston Churchill said of either democracy or capitalism, it’s just better than everything else. That’s all. That’s the only thing I say. It’s better than everything else.

Greg Saylor 33:24
So one of the things that I found, like, when I’m looking at properties, using your website that I found a little tricky was the providers. Some of them put 20% down, other ones put 25% down, they put different interest rates in there. And it doesn’t really translate to what interest rates I’m able to get. So I that’s why I had to build the spreadsheet right there because I needed to be able to take that numbers, put them into my spreadsheet so I could see what the actual, you know, numbers we’re considering the financing. Right, exactly.

Jason Hartman 33:57
So that is a terrific point. it. And that’s one of the reasons I want. Well, for the first part of that is, all of our investors need to number one, embrace the fragmentation, like I say, because that’s what keeps the institutional investors out of our business. So you do have that fragmentation, which is annoying. I completely get it, right, because you have one, one group in one area that does it one way and another group in another area does it another way, right? Yeah. So there’s fragmentation but standardize your data as much as you can by using our system the the property tracker property shopper system on the Jason hartman.com website. But the second part of it is, is that if you actually subscribe to that software, you can change the assumptions and you can make it all dynamic. It’s static when you’re looking at our website and we are working on an upgrade to that. But I’m not going to say that’s coming anytime soon. You know how software projects go in your business? But then you can Those numbers and you can make them all 25% down. Like you said, You wanted to have them all be consistent, like that are all the same interest rate or whatever you want. So yeah, good point.

Greg Saylor 35:09
Yeah. So it’s so basically I told you where I had this spreadsheet where I could enter four or five numbers. And, you know, I would use your website, your website gives you a great, kind of, should I should I look at this further, kind of, right. I mean, I can figure that out really quick from your website. But then I just take horrified numbers, punch them into the spreadsheet, I got three properties that look attractive. And I’ll punch them into my spreadsheet and figure out which one, you know, for their members looks better. So it’s kind of like the filtering that I can do on your website is really good. But there’s just another it’s like the due diligence, I guess.

Jason Hartman 35:45
Yeah, absolutely. Okay, good. Good. So tell us what else happened. What did it tell us more about the experience.

Greg Saylor 35:52
Okay. So, in addition to that, I kind of have this view of risk, I think around these around my properties that as long as I have, let’s say, good solid, let’s say really conservative single family homes, that Windows I can afford to take some other risks like with duplexes or with maybe properties in a little bit lower rent, lower grade neighborhood, you know, as long as I have that good foundation of good performing conservative, you know, really good properties and I can, you know, take a little bit more risk in some other areas. So I’m, I’m, as you would say, I think, independently owned and operated so I, you know, can take a little bit more risk in my life perhaps. So, the third duplex I bought in Chicago, and it was in a not not a very good neighborhood of Chicago and section eight tenants, but it’s been a really, really good performing property. But the trick there I think was a property manager that knows how to deal with those tenants in that area. That is like was critical for me. So I did a lot of betting on that particular property manager and wouldn’t have felt as comfortable doing that, for example, in Indianapolis, just based on, you know, not there’s anything wrong with any of the property manager there. They’re all wonderful, but it’s just experience with that type of tenant.

Jason Hartman 37:27
Right? It’s a it’s a specialty. Yeah,

Greg Saylor 37:30
no question about it. Good. And then I switched to the single family homes. I bought one in Memphis. That’s number four. And then, hopefully next week, I’ll be closing on another one in Memphis, and another one in Columbus, Ohio.

Jason Hartman 37:42
Fantastic, Eric, congratulations. Why did you pick the certain markets you picked and what was behind that? I mean, you could have picked different markets. Why that was.

Greg Saylor 37:51
It. I think it’s coming back to a bit a little bit of my view of risk, which I can’t even really argue regulate Well, it’s just sort of this innocuous thing that I wanted to be in, you know, a few different markets with different types of properties in those markets. And I liked all of these markets. I like all of these areas. I don’t like. Columbus is probably the easiest one, I guess. But that’s because I was surprised by the property taxes they’re liking. In Chicago, the property taxes are high, as we all know, but the rents kind of support that in Columbus, not so much. But I feel like Columbus is.

Greg Saylor 38:35
It’s coming around.

Jason Hartman 38:36
Yeah, I agree with you. Oh, Ohio isn’t as blighted as it used to be. I I’m not as hopeful about Detroit. But but the Ohio markets that were actually really pretty blighted in years past they’ve, they’ve come around quite a bit. I mean, when I’ve been in Columbus, Cleveland. I mean, I just I’ve been pleasantly impressed. I really didn’t expect to think as highly of those markets as I did until I, you know, till my last visit before my last visit to them, you know, and I reported on that on prior podcasts, but

Greg Saylor 39:11
and I should say, as well, you know, I lived in Indianapolis for many years, and made many road trips to Chicago and Columbus. So I was a little bit more familiar with those areas as well. So I can’t say it was conscious Lee, looking at those markets, because I was familiar with the area, but that might have been an unconscious factor. I don’t know. But But, you know, it’s like, I looked at all the markets. I looked at, you know, Atlanta, you know, all the markets and those ones just resonated with me. in Columbus. I like, like you just said, I think I just, I like the way that city feels for some reason, you know?

Jason Hartman 39:51
Mm hmm. I agree with you. No, I agree. I agree. Good stuff. Okay. What else do you want people to know about the experience, just Anything else? The question I haven’t asked you,

Greg Saylor 40:03
I would say,

Greg Saylor 40:06
another surprise that I had along the way. And I feel like I’m being so negative. I don’t mean that but was, you know, property taxes. I’ve been a bit surprised a couple of times with property taxes. So I think it’s worth for me I just added as part of my workflow, whatever you want to call it, to just double check the property taxes.

Jason Hartman 40:25
I think that’s very good advice. And one of the constant battles we have, and property taxes, I would say are one of the hardest ones to hold local market specialist accountable on is they generally speaking, they are not conservative enough on the numbers. You know, they’re salespeople, okay. They want to sell properties. And we are constantly as they upload properties to our website, and we make them do the uploading so that they have to make the representation about the property and its performance and you know, it’s pretty objections and so forth. But one of the things that we’re constantly battling with him is, you know, estimating rents higher than they should be, we want them to rein it in and be more conservative. And that’s one of the nice things about having a someone like us that offers an area agnostic approach. And we’ll tell you, if we think they’re, they’re being too optimistic on those numbers. But one of the hardest ones for us to check and know is property taxes, because that’s a complex thing. And it varies by the municipality. So just always take whatever they tell you and just assume it’s not going to be quite as good as they tell you. Okay, that’s the first thing. But the second thing is and I talked about this on a recent show, about the Chicago land area. Of course, when we talk about these markets, we’re not being specific as to city we’re talking about metropolitan areas, okay. So everybody understands that, even if property taxes go up quite a bit, given their financial payrolls in the Chicago or the Illinois area, I should say the whole state. I think the numbers still work out pretty well. I mean, I took our performers and change them based on a 1020, even a 30% increase in property taxes. And those deals still look pretty good to me.

Greg Saylor 42:21
Yeah, I’m baffled in, in kind of a good way how the properties are performed. And just the general quality of the rehab work that is done there. I’ve just been really, really blown away by it. You know, I would think my brain tells me that a property in those areas at that price point with those property taxes wouldn’t perform, but we run the numbers they perform really well. Mm hmm.

Jason Hartman 42:46
Good, good stuff. No, it is surprising. And I think that has the chance to really be more of a hybrid market, where you could see some decent appreciation, as opposed to the more linear markets that just sort of chug along and appreciate more moderately, so That’s another benefit of it.

Greg Saylor 43:01
Yeah. And let me get this knocked out as well. Because I’ve said, I’ve said a couple of things about, you know, the, your website and some of the things we just talked about. But, you know, being a software engineer, one of the things we deal with is normalized data a lot. And you guys have done a remarkable job of that there’s other providers out there that are in multiple markets, they do not do nearly as good of a job as you guys do. So even though I have a few, but I’ve called almost due diligence items or not even and there’s minor, but they’re, you guys do a really good job of getting us, you know, a good idea of what a property’s gonna look like, if we were to buy it.

Jason Hartman 43:40
Yeah, yeah. Good. Thank you. We really, you know, that’s the first thing I said, when I got into this business. Many years ago, as I said, look at goddess standardize the data, because I was trying to do this myself. And I didn’t have anyone to help me. I mean, that’s why I started this business. His back in 2003 2004 I wanted to become a nationwide investor. And I mean the data I would get Greg It was like I had to be a detective work for every deal. It was just crazy the amount of detective work I had to do and I had to assemble things into my own format. And it drove me absolutely nuts. You got to standardize the data. So that’s absolutely imperative.

Greg Saylor 44:26
Yeah, I couldn’t agree more and the other thing I would put out is where’s it gonna go with this? Oh, I’m in terms of the property of course I track all my income and expenses in you know, month by month and I’ve been pretty surprised that the properties haven’t just met the Performa they’ve actually exceeded the Performa So, in general, like after, after anything is all said and done. I think the numbers you guys put up there are actually pretty conservative.

Jason Hartman 44:57
Yeah, that’s what we try to be. We just want you to Have a better experience than what we say. But even if you don’t, even if those numbers come in short, it’s still gonna be pretty good, you know, compared to whatever else you might do, I would say I would hold our, our deals up against anything else you could find, you know,

Greg Saylor 45:15
so and then here’s a real example, like the Chicago property, which I mentioned wasn’t in such a good neighborhood. But I kind of knew that I knew I was taking a little bit more risk with this property.

Greg Saylor 45:26
It we need to put a fence up, right? There’s

Greg Saylor 45:30
no say not good activities going on in the backyard at night. So we need to put a fence up, which is something that we probably wouldn’t have to do. I wouldn’t have to do if I say we, I mean, the property manager and I were in Milan that we should probably wouldn’t have had done in any of the other properties that I bought. You know, it’s just little things like that that can but ya know, it’s just a risk that I kind of knew going into that

Jason Hartman 45:53
right and so, plan for some additional expenses. Be conservative on your numbers have a result fund. That’s all good advice. Very, very good points and tell us what are your plans for your investment portfolio? I mean, you know, you got into this because you wanted to earn a higher return on your money, of course, and maybe the overall goal of financial freedom and leaving the corporate world someday, I don’t know what what are your plans?

Greg Saylor 46:20
That’s an interesting one, because I really enjoy the work that I do. But you know, it’s, for me, growing up really poor, has had sort of this odd psyche, I can’t really explain it, but it’s sort of almost a fear of losing everything that I’ve had my whole life. So, to me, this is kind of more about redundancy, about redundancy of income stream. So if something does happen that has already had very positive impact on that, you know, I already feel more relaxed, just generally speaking, and you know, things are getting better, baby I don’t know if I should say this, but you know, the income that I’m getting for these properties just kind of blows my mind. I’m generating close to $4,000 a month from these six properties. Wow, that

Jason Hartman 47:12
is fantastic. Yeah, that’s what those are. Those are all based on 25% down. Yeah. Yeah. Wow. Yeah, you’re doing great.

Greg Saylor 47:20
Yeah, you be happier with this I’m like, really blown away by it. I mean, that’s that’s not county maintenance and things may come see loss. That’s, that’s how I kind of rate my goal progress, I guess is looking at the income, but then not counting vacancy loss or maintenance. That’s how I kind of track my goals, I guess. You know, yeah. I attract performance. I track my goals.

Jason Hartman 47:44
In terms of goals. Do you have a certain number of properties you want to buy?

Greg Saylor 47:47
I think it depends on what’s gonna happen after property number 10. I’m not sure. I know there’s some solutions out there but I’m still not real happy with the ones I’ve seen either

Jason Hartman 47:59
in terms of finding answering more than 10 properties, right?

Greg Saylor 48:01
That’s right. Yeah, yeah. And and the other thing that I’ve noticed is, you know, the debt to income ratio, or personal debt to income ratio is actually a really important factor in financing. And what I always thought is that as I buy more properties that I’m going to have income coming in from the property and expenses going out with it, my debt to income ratio is actually going to go down. But that doesn’t happen. It actually goes up, I suppose it depends on where you start in the debt income curve. But the way numbers averaged out, it actually kind of keeps creeping up with every property purchase. And I think that number needs to be less than 43%. I don’t want to speak for anybody but so it’s, you know, I’ve been, you know, I count for that on my spreadsheets now to just to make sure that if I’m looking at a property that it’s not going to my debt to income ratio is going to be okay with that,

Jason Hartman 48:51
right. Okay, good, good stuff. And so you’re going to get to your 10th property, and one solution because you don’t like the finance thing out there for more than 10 properties is to just get married and have your spouse buy 10 more.

Greg Saylor 49:08
There you go. Okay, now you’re just teasing me, Jason. There you go. Yeah, good.

Jason Hartman 49:13
There’s a creative solution, Greg.

Greg Saylor 49:17
Actually, here’s another creative solution I thought of, I don’t know how all this would play. But, you know, one has the flexibility to relocate. My understanding is you can buy one primary residence a year.

Jason Hartman 49:29
Well, yeah, but that’ll that’ll be a slow process. But yes, you can do that. Absolutely.

Greg Saylor 49:32
Yeah. So yeah, I’ll definitely be hitting, you know, 10 properties this year. So it’s, you know, in less than a year, basically, I would have filled out my conventional financing. So,

Jason Hartman 49:44
yeah, good, good stuff. Well, Greg, it’s been fantastic. hearing your story. Thank you so much for sharing it with the listeners. Just, you know, anything else you want to say to wrap it up?

Greg Saylor 49:54
I just want to give another shout out to Oliver because part of the due diligence that I do is of course, looking at the neighborhood. And he gave me a lot of really good ideas. And I found some on my own to about, you know, kind of how to like make it back to risk. You know, I want properties, some in good neighborhoods, I ran some I actually want some properties in some less than great neighborhoods. And some things I used to look at that are what’s around the property, like, Is it just a bunch of liquor stores? Or are there movie theaters? Are there other things like, you know, as they kind of go up the scale, there’s like more entertainment type things around the property. And then you get into a really good neighbor, you gotta like golf courses and things like that. So I kind of use Google in a very large way just to figure out what’s around the property and get a sense of, you know, is there a Home Depot nearby or Lowe’s nearby, you know, that kind of stuff. And I think that’s been really helpful for me, and of course, just walking around the street, the technology that’s out there now To be able to look at a neighborhood is just phenomenal.

Jason Hartman 51:04
Yeah. And soon as soon we’re gonna be able to dispatch our personalized drones out to do that for us, too. So it’s, it’s a great, it’s an amazing time to be alive as I always say.

Greg Saylor 51:15
It certainly is. Yeah, it’s done. Personally, thank you to you and all that you guys do. I know you guys work really hard on on everything. And I’ve been an incredibly fortunate benefactor from that.

Jason Hartman 51:29
So well, thank you so much. We appreciate your business and appreciate having you as a client and hope that we can help you build an awesome financial freedom portfolio. So thank you.

Greg Saylor 51:38
Thank you so much.

Announcer 51:41
I’ve never really thought of Jason as subversive. But I just found out that’s what Wall Street considers him to be. Really now How is that possible at all? Simple. Wall Street believes that real estate investors are dangerous to their schemes? Because the dirty truth about income property, is that it actually works in real life. I know. I mean, how many people do you know not including insiders who created wealth with stocks, bonds and mutual funds? those options are for people who only want to pretend they’re getting ahead. Stocks and other non direct traded assets are a losing game for most people. The typical scenario is you make a little you lose a little and spin your wheels for decades. That’s because the corporate crooks running the stock and bond investing game will always see to it that they win. This means unless you’re one of them, you will not win. And unluckily for wall street. Jason has a unique ability to make the everyday person understand investing the way it should be. He shows them a world where anything less than than a 26% annual return is disappointing. Yep. And that’s why Jason offers a one book set on creating wealth that comes with 20 digital download audios. He shows us how we can be excited about these scary times and exploit the The incredible opportunities this present economy has afforded us. We can pick local markets, untouched by the economic downturn, exploit packaged commodities investing, and achieve exceptional returns safely and securely. I like how he teaches you how to protect the equity in your home before it disappears and how to outsource your debt obligations to the government. And this set of advanced strategies for wealth creation is being offered for only $197. To get your creating wealth encyclopedia book one complete with over 20 hours of audio, go to Jason hartman.com forward slash store. If you want to be able to sit back and collect checks every month, just like a banker. Jason’s creating wealth encyclopedia series is for you.

Announcer 53:53
This show is produced by the Hartman media company All rights reserved for distribution or publication rights. And media interviews, please visit www dot Hartman media.com or email media at Hartman media.com. Nothing on this show should be considered specific personal or professional advice. Please consult an appropriate tax legal real estate or business professional for individualized advice. opinions of guests are their own and the host is acting on behalf of Platinum properties, investor network, Inc. exclusively.


In today’s episode, Jason Hartman is joined by Fernando and Oliver to talk about self-management options for your income properties. They agree that a great property management company is valuable, but it’s also helpful to know about self-management options. They also discuss maintaining a good relationship with your tenants, best practices to improve home interiors without spending a fortune, and companies who use technology to save you time and money through automating tedious tasks.

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 complete solution. For real estate investors,

Jason Hartman 1:03
Welcome to the creating wealth show. This is your host Jason Hartman episode number 729 729. Thank you so much for joining me today, as I am sitting in the car, so pardon, the audio quality won’t last long, because we’ll get into the main portion of this show, which will be a replay of our self management panel from our recent Real Estate Software with real estate tools. That was our joint event with real estate tools and my company. We talked about technology for real estate investors and self management versus professional property management. And Fernando and I happen to meet here today in Mesa, Arizona, at a little income property Expo. And we thought we just report on that real quickly in this intro portion here. Before we get to the main part of the show, Fernando, welcome. How you doing? I’m doing great,

Fernando 1:56
Jason, nice to be here.

Jason Hartman 1:58
Good to have you. And so we made up with this this little Expo. Then we just decided to walk out and record this intro here sitting in my car which is soon to be your car. That’s true. tell everybody about that. We’ve done a lot of business together Fernando you and i

Fernando 2:18
i i wasn’t much of an electric car fan but after being here with you and seeing how cool your car is and you know a lot of the pluses and some minuses but I think mostly pluses I made up my mind that this is the next step in going from my my current you know Audi based car with the combustion engine to go into an electric vehicle as powerful and as interesting as the Tesla is really as sexy

Jason Hartman 2:50
as the Tesla sexy as a sexy looking car. It is a great so Fernando bought my car yeah smallworld so first Fernando was a client. And he bought a bunch of properties, of course, and then he came to work with us then to get together last year, we bought that real estate software company real estate tools. And then he says, You know what? Why don’t I buy your Tesla from you? And so we just struck a deal. And now he’s gonna be ending up owning this car soon.

Fernando 3:21
So I like to have you pay for the, you know, the depreciation.

Fernando 3:27
You know, it worked out well. Yeah.

Jason Hartman 3:30
I definitely took the depreciation hit. Never, ever, ever consider an automobile and investment. It’s a terrible deal. No matter which way you slice it. But hey, let’s tell the listeners about some of the things you know, we just spent the last hour or so walking around visiting all of the exhibitors we talked to every one of them we we talked to a company that offers Nationwide Insurance. We talked to a company that has a high tech locking mechanisms for properties. I’m really sort of excited about that one. I know you are two because that lends itself well to self management of our properties. And we talked to some vendors that do paving and things like this. There’s a lot of apartment, people here. Gosh, the hard surface flooring. That was a pretty good deal, huh? Yeah. Yeah. So so in your properties, Fernando, you’re converting, I believe all of them as am I, whenever I have a make ready, and it’s time to just get rid of the carpet and install new carpet. I am not doing carpet anymore. I’m doing hard surface floors. And you can do this for around $2 per square foot. Talk to us about what you’re doing. And while you’re paying a little more than that, right,

Fernando 4:39
yeah. So so we just met with a vendor in this Expo, income property Expo. And their prices are excellent. I mean, what I think what he quoted was $2 a square foot installed. Yeah, for plank vinyl, which is, you know, going back to what you said I’m trying to standardize in my properties in not used carpet in US plank vinyl throughout the entire property playing final lasts a long time. And you know, as we’re discussing here, it’s not that expensive and they have so many different textures and colors, you can really spruce up your place with a pink vinyl and make it look very sharp and not spend as much money in, in if it’s gonna be there throughout your house and last forever. It’s definitely a good investment. So bear to anything else you could do.

Jason Hartman 5:29
Yeah, and so cost wise here. Here’s the approximate difference, at least from this vendor. You know, if you have a 1500 square foot house, this is about $2 per square foot and you can put it in every room and I really recommend that you don’t cut up your house with a bunch of different floorings number one, it’s over complicated. Number two, it really doesn’t look good. I think it looks the best when you just have one flooring throughout. And in my opinion, it should be the lighter plank vinyl lighter colored version of it. I think the darker color gets dusty, it shows the scuffs a little bit more. And it also makes the house look smaller when it’s darker. So I like the lighter look definitely kind of like the Apple Store. You know, if you’ve been doing a store, you know, they’re looking here, they’re gonna update that. So this will not be timeless By the way, it’s the Apple store as of today, not tomorrow. But this plank vinyl is really good. And this guy quoted that at $2 a square foot and carpet at $1 19 per square foot. So a buck 20 a square foot, well let’s just take thousand square foot house 1200 dollars for carpet throughout and obviously wouldn’t do carpet throughout but just to compare apples to apples and the playing vinyl 9000 square foot house can be $2,000 to do that. I think that extra $800 in that example, is very well spent for the long run because you’re just not going to have the make ready issues down the road. You know it becomes nothing is indestructible but you know finger a speech kind of an indestructible house right?

Fernando 7:07
No, I mean that the plank vinyl is easy to replace if there is one, you know they come that’s why it’s called plank Vanu vinyl comes in planks and if you need to replace one plank, it’s very easy to do.

Jason Hartman 7:18
Just cut it out with a big exacto knife. Exactly. And the installation is very simple. There’s different kinds of playing final but there’s there’s a version of it that they sell at Home Depot that you start with a pair of scissors, you know, just just a heavy duty pair of scissors, and it’s not even glued down. It’s really easy to install. Now, these prices are excellent. I wish this vendor was national but I think he’s local. And you know, here’s in Arizona, I know that Home Depot sells for $1 79 a lot of their lower plank vinyl that I’ve looked into. So by the time we get that installed, you know it will cost a few a few dollars or square foot so his his prices are really good. And here’s the thing folks look at. Don’t let your property managers mark this stuff up a whole bunch, or don’t let them choose the most expensive vendor in your market. Look at you can get this stuff. The great thing about the world today is that we are in the world of the empowered investor, you can go online and you can find this stuff. And the new benchmark is $2 a square foot for plank vinyl. So if you can get it for close to that, that’s what this guy’s price was. But you know, if you can get it for 210 a square foot even, you know, to 15 to 20 a square foot you’re doing pretty darn good, I think. Okay, so that was one thing. And what we want to do is make the long term cost of these properties lower. So if you inherited or purchased a house with carpet, well, I don’t think many of our investors are inheriting these properties, but I don’t know why. Yeah, well, you’re inheriting it from somebody. Yes. But you know, you bought a property and it had partial carpet. Get on a track of replacing with this plank vinyl. I think that’s a very good decision. And I think you’ll be much happier in the long run your house will be more bulletproof. Yes. So that’s good. Now, the other thing is these locks. And we’re going to talk about this in the upcoming segment here in just a moment. But again, the empowered investor, you can self manage properties. The lock technology, I think, has been comparatively to smartphones and all of these great things we have. I think it’s been pretty slow to evolve honestly. But it is it is right upon us. Where we saw a lot today what was that called Kiko QK, low kV Oh, yeah. And I think it’s by Quick Set is the manufacturer. So ke vo and what this lock is is a Bluetooth enabled electronic lock. And it was pretty neat the way that worked without Having a Wi Fi or a cellular receiver and transmitter in that lock, right? It’s simply a Bluetooth. transmitter receiver. Right. Right. thoughts on that?

Fernando 10:11
Yeah, yeah. So I think that’s halfway, you know, from an investor’s not

Jason Hartman 10:15

Fernando 10:16
but pretty close. Yeah, we had an interesting session with with the guys at the booth. We got the whole demo. Yeah, we gave it to them. And we gave them a piece of our mind as far

Jason Hartman 10:28
as what we would like to see as investors. We’re never clinical.

Fernando 10:34
And, you know, they’re doing something neat, which is a Bluetooth enable electronic lock in essentially, your smartphone can control the lock as long as you’re within, you know, 30 feet or so of the lock. And you obviously can communicate with the lock via smartphone. But what we want is, you know, we’re not at the property, the properties that we own when there’s a make ready, they’re vacant, and we are probably thousands of miles away from the property. So We want because we invest where it makes

Jason Hartman 11:01
sense exactly, not where it’s convenient to have a lock and key, you know,

Fernando 11:06
we don’t live near the property so that we want to make sure that that lock can communicate with with the software that controls the lock via a cellular connection. We don’t want Wi Fi, because we don’t know the house is vacant and maybe doesn’t even have electricity. So that has

Jason Hartman 11:22
to have Wi Fi so it needs cellular, but Fernando, it’s not that bad. You know, this is this does more than you led them to believe you gotta tell them a little secret. So here’s the way this chemo lock works. Okay. And I know sometimes on the show, we talk about big, elaborate macro trends in the economy, and big, elaborate investing philosophies. Now we’re just being a little practical today, folks. So we’re talking about some nuts and bolts stuff. You know, on a future show, we’ll talk about the big, you know, elaborate stuff, you know, the big philosophical stuff. But here’s the way this works basically, with the Kibo lock you can provide access to Contractors Repair people, prospective tenants, prospective agents and property managers that you might want to hire. So they can look at the property and insurance agent, whatever, right? And here’s the way you do it. It’s pretty cool, even though it doesn’t have everything Fernando wants, which I agree, I want all that too. But it’s, it’s a step in the right direction. And so here’s the way it works. You download an app to your smartphone, and you can control that lock via Bluetooth. But you can control it via Bluetooth, sort of as a proxy through somebody else’s phone. So that person is local. So it might be say, a painter, and you say, hey, go paint this house for me or go give me a quote on painting it. The painters got a smartphone, and you tell them to download the Kibo app, which is a free app, they can just download in the App Store. And then you basically link over the internet. With their app, and you basically give them through the internet a key to that lock, and that key has an expiration on it. And as soon as they open that lock with their smartphone, you get a notification saying a lock was open, so you know exactly what time they opened it, and what time they locked in. Okay, so that’s pretty cool. Even though there’s no Wi Fi or cellular, it works through Bluetooth as a proxy.

Fernando 13:28
Okay, of course, we need to, we need to see how it works in real life, as we all know, to make a connection via Bluetooth with your car can be very frustrating when you have multiple devices. And so when you lose when you when you have a Bluetooth enabled car, where you’re trying to connect your phone, oh yeah, a car. Yeah. And if you have multiple devices, you know, there’s there’s issues that I can imagine with the tenants, I’m able to have the Bluetooth enabled or not making Right, well

Jason Hartman 14:00
remember the lock is a regular key on it. So your regular tenant will probably just use a key, okay. But you can use the electronic functionality of it too, right? And so like, what I can see happening is, the person downloads the app, they get the key from you virtual key, and then they go to the door, and it won’t work, because maybe the Bluetooth on their phone is turned off. Right. Like, sometimes I forget to turn mine on. Like, why is it? Well, Tom, yeah. And so, you know, there, it’s certainly not perfect. Okay. But you know, the point is, investors Look, it’s an amazing time to be alive. And these technologies are progressing to empower us all more, so that we don’t have to be beholden to a property manager, and we can manage and run our properties from around the world. It’s it’s truly amazing how you can do this nowadays. And what you’re going to talk about in the upcoming panel that we’re about to play the recording from is about these Lock boxes that do that, right? And so stay tuned for a moment and you’ll hear more about that without boring them on this lock subject and the flooring too much. And what else do we want them to know from from this any takeaways today, nursing homes are far more complicated than they want one of my friends who promotes assisted living, I think that’s a great idea. But like anything, you gotta be a specialist. And it’s much more complicated in real life and all the promoters make it sound. I hope I’m not that guy, by the way, because I constantly talk about,

Fernando 15:33
I think what we need, we need to tell him tell anybody that is scheduled to host a booth in an expo that you must know about your product. You’re gonna get customers that become aggravated very quickly. I think you had that experience today.

Jason Hartman 15:49
So on one of my apartment complexes, I wanted to do some repainting why and then my mobile home park, same thing, you know, because the blacktop is looking pretty ratty. Okay. And I walk up to the booth and well, you know, how much does it cost to do a parking lot? What’s the price per square yard? And they don’t know. It’s mind boggling. Well, and I understand completely depends on the condition, right? Is it level ground? Is it all? You know, do we have to do a bunch of move some stones and rocks? And is it all Alligator, as they call it? You know, with the, with the, you know, the way it breaks up over time? I get it. I get it, I get it. But where does it start? You can’t even give me the starting cost. Are you kidding? Like,

Fernando 16:33
it’s a secret. Yeah. Well, he says he did. He truly did not know.

Jason Hartman 16:37
We looked at some screening services that was kind of an interesting discussion with as a tenant screening service. Yeah. Also. The other thing I just want to mention to you and testers, I you know, this one is something I have not talked about very much over over the past 728 episodes, but, you know, I really want you to consider adding a little color to your properties in the interior. I think, you know, having an accent wall that has a color on it would be a pretty good thing. I think it would be attractive to tenants. When that home is vacant and they’re looking at that. I just think that really lightens it up. I remember a bunch of my properties and offices. When I had regular real estate offices, and I had, you know, homes I was living in that I own. I would paint this beautiful color. It was Ralph Lauren Molina red or Malaya red, I can’t remember. But it was gorgeous. And all the other walls I just leave them alone, but I just do one wall in that color. And people constantly commented on how beautiful that was. And the Ralph Lauren, you don’t want to buy that brand because it’s outrageously price, but every other paint vendor just copies it and they give you this exact same color. And you want to do this with again to make your properties more durable eggshell finish paint or lotion. Finished paint, because flat paint scuffs up, and it looks so bad so quickly. You want your properties to be durable, it’s slightly more expensive, not much, but doing the eggshell or low sheen paint is a I mean, talk about lowering the cost of ownership over time and properties. Fernando you’re nodding your head like crazy.

Fernando 18:21
Oh yeah, no, I agree 100% because with with eggshell, the low sheen finish you can there’s a good chance of you being able to use literally wipe off some of those marks on the wall and not not have to do

Jason Hartman 18:35
painting a painting or

Fernando 18:36
the only issue. The main issue with with the these lotion paints, including eggshell is that the touch up is very tricky because over time, the sheen changes. It mellows.

Jason Hartman 18:48
Yeah. But the idea is you don’t have to do touch up in the first place. rightfully, you know, because it’ll last one. I remember my last house in Orange County that I sold in what tooth 2011 I had eggshell paint on there and I lived there for seven years and that paint look pretty good the day I moved out. Now, of course, the new the new buyer did repaint, because I went over and saw them afterwards. But, boy it I couldn’t believe how durable it was.

Fernando 19:14
Yeah, really? That’s definitely the right choice.

Jason Hartman 19:16
Yeah, good stuff. Well, hey, I think we ought to get to our segment today without going too long here. Be sure you go and check out Jason Hartman comm for some great properties. And check out Hartman education comm for some great educational products. Several of you have expressed interest and a couple of you have signed up for the venture Alliance. We’ve got our next meeting coming up in the beginning of December, tentatively planned for our hometown here, Scottsdale, Arizona right here locally. So that’s going to be a great event. more to come on that check out venture Alliance mastermind for details on the venture lions high level mastermind group and let’s get to our segment where we talk about some Management on this great panel with Fernando and Oliver.

Let’s talk a little bit about managing your property manager versus self management. We’ve got Oliver and Fernando here to talk about this. You’ve got 70 units. Now, you said a very interesting thing to me at I think it was the last week, the Masters maybe the one before possibly. And what you said is you said some of your self managed properties are easier than your property manager properties. Really? Yes.

Expert Panel with Fernando and Oliver 20:32
Tell us about that. So there’s different aspects of it. One of them is just because you have a property manager doesn’t mean necessarily that the properties are on cruise control. You have to look at the statements you have to approve items you have to be on top of items that look suspicious on the on the statement. There’s time evolved in talking to your property managers. And if you add all of that up, compared to self management does play a role into which one is easiest thing.

Jason Hartman 21:05
So how many units are self managed in your portfolio? And how many are property managed by manager? So actually

Expert Panel with Fernando and Oliver 21:10
I have I have two little things that you don’t know about. All right, that’s gonna be

Jason Hartman 21:14
pretty huge. I can’t wait to hear from you. And we’re gonna hear.

Expert Panel with Fernando and Oliver 21:17
So I prior to in the last midterm, so I had about 10 properties that were self managed, and most of them were in Austin, Texas. Austin was a good choice is a good choice for self management. Because the tenant pool in Austin is the B plus there’s a lot of tech industry in Austin and the properties that are that I own, there are BB plus properties and therefore, those those tenants are easier to deal with a lot of them. They are tech savvy. If there is issues, they can do some of the research they sometimes can fix the properties themselves. They use the mail, you know, they, they can communicate well, they’re, they’re easier to deal with

Jason Hartman 21:58
the basic concept there is a more simple sophisticated tenant is easier to deal with. As long as they’re not a lawyer. I had a lawyer call me up. He said, my wife and I want to rent a property and we have two dogs. And we’re both lawyers. I’m sure you don’t want to rent two lawyers and two dogs, right? He said that not me. I didn’t say anything. But he does. Yeah.

Expert Panel with Fernando and Oliver 22:20
But the most interesting aspect of it is that the dynamics when you’re self managing in this sort of B to A type, tenant pool, the dynamics are just different in that, the tenants tend to ask for a lot less things and they tend to be self reliant, which means that you have less issues. A lot of times the tenant will say, oh, send an email, because they use email and like some other transit tenant, and they’ll say, you know, there’s a problem with the AC. What would you like me to do? I already checked, and there’s a local guy here. If you don’t have anybody available, maybe I can call the local guy.

Jason Hartman 22:57
That’s how my Houston tenant was self managed. But he just he did all the work. It was amazing. Yeah.

Expert Panel with Fernando and Oliver 23:02
So I smiled and I said, Oh, please contact the guy and let me know, you know, reimburse you whatever is needed. There was another case where there was a leak in the flooring got wet. The tenant, you know, took out the part of the carpet that was wet and called somebody to see if that could be addressed and was not just telling me what the problem was, but also provide well being so right there, which is just awesome.

Jason Hartman 23:26
Okay, so here’s the thing that happens with self management. So first, let me just tell you what happened to me and on the road to self management. I had a Texas property property manager wrote a letter on getting out of the business. I’m not gonna be doing property management anymore. And so I had Karen, my operations manager at the time researching other property managers. It was a market that we weren’t very active in. Okay, at the time, she started researching other properties manager, she found a couple of them said, you know, made some suggestions. I was just busy and I did not get around to actually hiring a property man. Senator, following month, I get a check in the mail with a nice note. Hi, Jason, I heard that I should send the checks to you right now. This is your tenant on so and so’s Street. And he wrote me a nice note, right? And he says, If you need anything, he says this to me if you need anything. Here’s my number and email address. Right. And he stayed there for about, I think, three and a half years. And he was awesome. I couldn’t believe it. I just after receiving checks from the tenant directly for get this property I’ve never seen a tenant I’ve never met. Right? I just thought it was a phenomenal experience. And what I kind of realized, and I know a lot of you are thinking, well, I can’t self managed properties from a distance. Well, two things about that. Number one is in the vast majority of cases, except for maybe annual inspections. How do you think your property manager knows if there’s something wrong with the property? The tenant tells them all right, it the tenant is the monitor of the property, okay? Not the manager or the manager. doesn’t live there. Obviously,

Expert Panel with Fernando and Oliver 25:01
I think ultimately what it comes down to is really setting the expectation up front as much as you can with that tenant. So in terms of, you know, setting the expectation of when something does go wrong, these are the steps to take, whether it be send me a text right away, or if not, send me an email have some sort of correspondence. And if you even if you want, you can even set the expectation of if it’s under a certain amount, for example, like 100, or $200, you can go ahead and do so if you know and if we have any issues with it thereafter, then we’ll take care of it. And there’s very easy ways to actually to credit the tenants with certain programs, that we can

Jason Hartman 25:36
make a deal with a tenant saying that they have to do the repairs under a certain dollar amount. I mean, I know landlords that do that all the time. See, here’s what the other thing that happens with self management is that the tenant has the social pressure of maintaining a relationship with you, and you’re going to attest to the site now. Okay, so the tenant needs to maintain this good relationship with you as the owner With a property management company, ABC property management, they just sort of act like they asked for everything. Oh, I saw an ant in the kitchen, you better send an exterminator over, you know, a light bulb burnt out, I’ll come and fix it, you know? And and when it’s when it’s a person that they’re dealing with, and they know you’re an owner, you’re the owner of the property and they have that social pressure of needing to maintain that relationship with you. They literally at least in my experience, they just don’t ask for that much.

Expert Panel with Fernando and Oliver 26:31
It’s similar concept when you go on vacation and you stay in a large hotel. Any little thing that goes wrong you feel at least I don’t feel

Jason Hartman 26:38
you don’t feel bad about asking Yeah, you don’t want him to come fix

Expert Panel with Fernando and Oliver 26:41
but if I’m stay fight, I’m doing a home exchange or staying in somebody’s home. You know, you you have a different relationship with that person almost embarrassed to say certain things and he just fix it. Yeah. So that is that is definitely a true You are a tenant in soy Am I

Jason Hartman 26:58
interestingly at the moment We both rent I love renting because, well, we have to touch on why right? Okay. So, you know, when you rent a high end property, it’s such a good deal because the rent to value ratio just gets all out of whack and the delta between these two are just mind boggling, right? You rent if your property is under $200,000, you should probably own it. If it’s over $200,000, that delta gets bigger and bigger. And if it’s $2 million, you’re definitely better off being a renter. But what about that? were you gonna say about repairs? Right?

Expert Panel with Fernando and Oliver 27:34
I can I can see that dynamic playing with myself as a tenant. If I have an issue with the house, and I’ve met the owners and I know them. You know, I fix it myself before I’m thinking of asking them it’s almost embarrassing.

Jason Hartman 27:49
If you lived in some big institutional apartment or you had a property management company managing that property. You would no hesitation or hesitation. Yeah, it’s interest. Interesting. Yeah.

Expert Panel with Fernando and Oliver 27:58
Yeah. All right. So Two updates that I wanted to talk to you about. I think it was either last meet the masses or two years ago where we talked about that flat fee concept. You remember that

Jason Hartman 28:10
two years ago, two years ago, a year and a half early.

Expert Panel with Fernando and Oliver 28:12
Right. So I actually have that in place with my property manager in St. Louis.

Jason Hartman 28:18
Ah, so what tell us what the deal is, right? So percentage Did you read it? So I have

Expert Panel with Fernando and Oliver 28:22
eight buildings in St. Louis for plexes, two for plexes and the rest of duplexes and I was being negotiated about 8% monthly fee for property management, plus the lease the normal lease up fees and you know, some percentage of maintenance that they charge on top of the regular repair. So this is the old deal old do you know that’s what most property managers do? I wasn’t too happy with this property management company. And I decided to switch over to some other property managers that I had a relationship with. Previous to the to the one that I have in St. Louis. And I negotiated with a property manager a flat fee that in cludes the regular monthly fee, that property managers charge in my case 8% includes all the lease up fees, the renewal fees in any other of the nickel and diamond type of fees that you might see in a regular property management me negotiated a rate of 12% that would cover the entire everything. Yeah, the whole thing.

Jason Hartman 29:23
What about on the late fees, everything.

Expert Panel with Fernando and Oliver 29:25
So this is a In

Jason Hartman 29:26
other words, they get 12% of the late fee, and you get the rest instead of them keeping it all Exactly.

Expert Panel with Fernando and Oliver 29:31
Okay. Right. Interesting.

Expert Panel with Fernando and Oliver 29:33
So it’s a very simple equation. And we just started about three months ago. Mm hmm. And the deal is that as I add more properties, so So what I’ve done is I’ve tried this model with one building, and if it works, well, I’ll be moving over some of the buildings from my traditional property management agreement to this new model.

Jason Hartman 29:56
So this is what I had suggested at meet the Masters to 2015 that the property management fees and we talked about it with our local market specialist meeting on Friday before this event, I suggested that it’d be a flat concept where instead of having clients feel nickel and dimed that they actually pay a higher percentage. I didn’t name what that percentage was. It’s just whatever people agree to these are not fixed by law. You know, they’re it’s competitive market, obviously, but actually pay a higher percentage, but know what I call garbage fees, no lease up fees when a late fee is collected from the tenant because we want to have the interest be aligned between the tenant and the manager when a late fee is collected. The manager doesn’t keep it all, as they mostly do. It is split on that percentage. So if it’s 12%, then 12% of every dollar that comes in goes to the property manager, but nothing else. No renewal fees, no lease up fees, no late fees in the sense that they keep at all, which it doesn’t feel like that’s a charge to you the owner, but guess what, your tenant is your customer, we got to remember that our tenant is actually the one paying the money right? They’re our customer. You know, you don’t want to make the manager predatory on the tenant. In that example you don’t want to give them too high a motivation to be collecting late fees, because then your tenants gonna be unhappy and you’re gonna have higher turnover rate. And that’s not gonna be good right? You want your tenants to stay along time my opinion

Expert Panel with Fernando and Oliver 31:26
this works even better with multiplexes because now instead of having what you see the movies Yeah, exactly what you see the Canadian we go to the cinema anyways, it works even better with the four plexes duplexes, etc. Just because you’re now having that one set rate instead of having to essentially manage and look after each expense for every one of those units. Like Tell us a bit more about how much time and how much less stressful it is when you’re reviewing those statements. Everyone right

Expert Panel with Fernando and Oliver 31:52
and also in the same vein, because these are the most the transit tenants and the ones that have the highest turnover There’s a lot more lease up type costs either release or new tenants turnover. So having a flat rate works in my favor for those sorts of properties. So so you’re

Jason Hartman 32:12
really excited for the lower rate lower like C plus properties, C properties, right? It’s better, you don’t think I would work on the A’s. I mean, where you have managers in the B properties.

Expert Panel with Fernando and Oliver 32:23
I mean, I haven’t tried to put too much thought into it. But as Oliver mentioned, the amount of decisions that you have to make and how much of those charges you have to watch out for it, just it’s, it increases with the lower quality tenant, right? So having a flat fee works in the in the landlord favor. Yeah,

Jason Hartman 32:41
good, good. And I think it aligns your interest with the property manager. One of the real problems that may not have occurred to you yet, and it took a while for it to really occur to me is that there’s a concept in business and in law that you can’t serve to masters, for example, if you hire an attorney, they can’t work for you. And the other side too, even though sometimes it might feel that way. Technically, they can’t be working for the other side and for you at the same time, because it’s a conflict of what a conflict of interest, right? The property manager sort of has this inherent conflict of interest. They’re really serving two masters, because they have to serve the investor owner of the property, but they also have to serve the tenant in a way. Why do they feel like they have to serve the tenant? You might think? Well, they do. Because the tenants, they get angry, and they go online and they start writing stuff on Yelp, okay, or wherever. The property manager does not want that to happen. And they don’t want complaints with the Better Business Bureau and whatever. Even though the Better Business Bureau is a bit of a joke. If you ask me. They don’t want that. So they have to serve two masters, the investor and the tenant. And I find that a lot of times the property managers, they’re reluctant to take legitimate fees out of the tenants security. deposit. Do you find this to be true at all?

Expert Panel with Fernando and Oliver 34:02
Not so much that but I can see. I can see where where that would have. Yeah,

Expert Panel with Fernando and Oliver 34:06
yeah, I definitely agree. I mean, there are a lot of tenants out there or property management, especially whenever any of you have any type of make ready, watch what they put into that scope of work, because you could essentially dispute some of those items so that they actually be withdrawn from that security deposit. as Jason mentioned, they want to stay in the good favor of the tenants so that way, they don’t get bad reviews. Some of the best property management companies I’ve worked with have horrible reviews on Yelp, and some other outlets out there. But ultimately, just bear that in mind whenever you’re doing your due diligence and your research online.

Jason Hartman 34:39
And interestingly, you say some of the best you’ve worked with have horrible Yelp reviews because they’re fighting for the owner. Exactly. And those reviews are probably from tenants, right? I mean, they may not be owners could review them too. Of course,

Expert Panel with Fernando and Oliver 34:49
exactly. Just meet with them as if you can otherwise just do your due diligence in terms of interviewing them asking the right questions.

Expert Panel with Fernando and Oliver 34:56
Jason talks about this all the time. If you have a problem. Manager and you have good chemistry with them. If they’re doing a good job, you don’t have issues, keep them. Yeah, you know, they are worth their weight. And I do have one one property manager in particular that goes on cruise control. Very few interactions with them. They work very well. So not touching that at all.

Jason Hartman 35:17
In other words, it’s cruise control for you, not them, because they’re doing their job.

Expert Panel with Fernando and Oliver 35:20
Yeah, right. On the other side of the spectrum, we talked about self management. So the next update that I wanted to bring up is in Atlanta, I had a property management company that was managing about 25 of my properties. And I was painting traditional type of arrangement with them, I was paying them and negotiated down to 7% monthly fees, but they had all kinds of other fees and stuff. It was actually closer to eight or probably more, at least on the fees, not counting the lease operator, that sort of stuff. But they weren’t doing a good job. Be very careful with quote unquote property managers that are nothing more than dispatchers. They should be Solving problems, not just passing the problem on to you. Yeah, right. And it really it got to a point that there were in this case, there were two people that working in this property management company, one of them was terrible at this issue, where the the initial come up from the tenant in the property manager would not provide any solutions when the communication would come to me simply

Jason Hartman 36:25
pass the problem.

Expert Panel with Fernando and Oliver 36:26
Yeah, please advise. Yeah, right. My immediate reply, Okay, tell me more about it. How much is it gonna cost are there different, it was always the same type of conversation. It got really old very quickly, in I looked at the amount of money I was paying to them. And there’s plenty five properties at a standard type of property management, roughly 40 $500 a month.

Jason Hartman 36:47
Well, 25 properties, were a nice account for them a

Expert Panel with Fernando and Oliver 36:51
very nice account. As I mentioned, there were two people working in this property management company and I got along pretty well with one of them, which I had a relationship with in the past. Through through another property manager company and I wanted to know, if there was a better way to do this, could I self manage these properties? In what? what I decided to do is to give an ultimatum to the property management company. And I told them that they had to cut their fees by 50%.

Jason Hartman 37:21
Wow, to 20 $250. Yeah. You can’t say that when you’re only paying the manager $90 a month, just so you know, it’s just not gonna have more leverage, okay.

Expert Panel with Fernando and Oliver 37:30
Yeah, in the, you know, you know, would you would, I will be willing to stay, you know, working with you if you cut your fees by 50%. And if you don’t, what I’m gonna do is I’m going to self manage the properties. I’m gonna transfer the properties under the LLC that owns title on the properties, and I’m going to hire an assistant to help me with the issues of property management

Jason Hartman 37:56
for 20 $250 a month for 4500 dollars a month, you could pay someone 60 grand a year almost?

Expert Panel with Fernando and Oliver 38:03
Well, it gets better than that. Yeah. When I do the math with how much time they actually spend, I asked the property manager, how many hours a week do you actually spend on these 25 produce? Well, you know, so so spends five hours I spent about, you know, five hours, maybe 10 hours a week. So I did the math. So I mean, if I paid this guy, you know, 30, or I don’t remember what the what the exact rate was, I would actually pay 1500 dollars a month for property management services through through an assistant compared to 4500 that I was paying to the Yeah, to the traditional group. Oh, I got that guy’s attention. It was it’s a small property management company. So he called me the next day and, you know, he I think I have 50% margin in my business, you know, what do you think you’re doing and blah, blah, blah, blah, blah. And I was very calm and I said, Look, you might have the wrong business model. Yeah. You just might not realize that the the industry is changing right under Yeah, they

Jason Hartman 39:00
don’t it’s a really old fashioned business, unfortunately,

Expert Panel with Fernando and Oliver 39:03
in he was he was, you know, telling me that he could not hold the account. And, you know, there was no way that he could make this work and would have to end the agreement at the conversation lasted about five minutes. Yeah.

Jason Hartman 39:16
You know, so now you’re self managing.

Expert Panel with Fernando and Oliver 39:17
Yeah. So we started this, three months ago, three months ago, there was a clause, a termination clause that was in a contract that required me to stay with them for 60 days. So the 60 days expired, and we transferred over the properties. And now we use that folio as part of the communication with attendance and track of Have

Jason Hartman 39:39
you bought a subscription to App folio? Yeah,

Expert Panel with Fernando and Oliver 39:42
how much was that? 250 a month,

Jason Hartman 39:44
$250 a month. So. So if you want to really build a good sized portfolio and self manage it, you can just use that yourself. Okay. For example, you don’t need to be in the property management business, but you can take advantage of the software. They use that’s what property managers use fully a lot of them the the, the checks get directly deposit into my own bank account as opposed to stay in a few days with a property manager

Expert Panel with Fernando and Oliver 40:09
using cozies for them so cozy I use for 10 other properties. And that’s cozy is another company that we, we love, we love and we had them meet the masses before they do rent collection really well and they set up accounts with the tenants and in have direct deposits coming into your account days after the payment is done. And it works really well.

Expert Panel with Fernando and Oliver 40:33
They can actually also screen the tenants too, which helps immensely because your credit score will show up their employment history. Also any type of criminal record will also show up on some of these reports that you’ll just go to cozy.co it’s not.com.co. And it happens seamlessly and only takes about four or five days to actually get your checks deposited. So for anyone who’s self managing, that’s definitely

Jason Hartman 40:55
so when you self manage, you get your rent faster, like my mother, the Extreme do it yourselfer? okay and I disagree with her extreme do it yourself or philosophy but a little bit of do it yourselfers. Okay. She’s like a hawk. I mean, I remember I was at the Cleveland Clinic with her and this might be a little overkill. I was trying to take the phone away from her. And she’s literally in the recovery room. Coco and I are there visiting her. Yep, that’s you, Coco. Were there visiting, you know, they let the dog in the recovery room, which was kind of cool. Um, and all the nurses fell all over the dog just loved her. It’s the first of the month and she’s looking to make sure her rents are in her bank account, because she makes the tenants responsibility to go to she’s with a national bank, okay? And the tenants responsibilities go put the money in her account on the first and if it’s not there, she’s on it. So versus having a property manager, you might not get paid till the 20th of that month because they’ve got to collect and do their process and the check has to clear and then they send the check to you or they deposit direct deposit hopefully in your account. If you’ve got a good property manager. They’re worth weight in gold, I mean an income property. Because gold isn’t that great, as we’ve discovered. But, but if you’ve got one that’s just not that good. You know, you might try self managing. Sometimes when you do things directly, it’s actually more efficient than having someone else do it. Like if you look at two US presidents right, and one that I kind of consider to be a pretty bad president, one that I consider to be a pretty great president, Jimmy Carter versus Ronald Reagan. Now, this was way before my time, I wasn’t even born yet. But I hear about them and watch some documentaries. And so you know, Carter was like this. He did everything himself, supposedly, which wasn’t really true, but that’s the image he liked to portray the common man thing, right. And Reagan was like an executive. He was more like a delegator. Right? And some things, it’s just easier to do them yourself. And if people try to tell you, oh, well, Jason, you got to delegate this. They say to me, right, you said this to me. And sometimes it’s true, it should be delegated. But sometimes it’s literally just easier to do it yourself. With technology that we have nowadays, a lot of times it’s easier. I mean, look at the example of you go into some usually older executives office, and occasionally you’ll go into their office and there’s no computer on their desk. It’s kind of shocking. Why have a secretary for that? Are you kidding me? Like, you know, to type an email. I mean, just that’s just so inefficient. It’s just easier to do it yourself to now have a third party. So sometimes it’s easier you take out the middleman and go direct, but I think you really hit on it. It depends on the type of tenant. Yeah,

Expert Panel with Fernando and Oliver 43:32
if it’s a and b tenant, probably much easier. If it’s a C tenant, you know, it’s not as easy to self manage it. I know most of you listen to the podcasts. There are a ton of companies that you bring up in interview the executives of these companies and the owners, and they tell you about the services that were traditionally done by property managers

Jason Hartman 43:58
like all hearts, I’ll start

Expert Panel with Fernando and Oliver 44:00
services cozy. We just mentioned that or rent Lee calm, which does the lockbox and stuff, we have the national eviction podcast that you had the other day, all of these pieces that were under the umbrella of a property manager can be done more efficiently with all of these companies. Yep, you know, directly. And that’s what essentially self management is, is the ability to be able to create accounts and have these companies work directly with the property in this case or with me or with the, with the bank for direct deposits and that sort of thing and make it happen for you, instead of having a property manager be the minimum

Jason Hartman 44:36
in the beginning of the internet era, the first.com bubble that happened shortly after but you know, late 90s, early 2000s the big word in the tech world in the internet world was disintermediation, right, getting rid of the middleman, and you know what you can deconstruct a lot of this stuff and it’s sort of all a cart now that you really can do it more easily yourself. And one of the visions that Fernando and I have with real estate tools is to create this platform that in my dogs moves like a cow, it’s hilarious. Did you hear that way back there? Go Go. What do you think? Yeah, there she is. He’s behind Fernando there. So one of the visions we have is to create this platform that empowers investors to self manage, and if they have a manager empowers them to work better with their manager, it you know, they get the choice of how they want to do it. One thing I wanted to say about Oliver’s comment and it’s really related to cozy is that there is a big sea change happening in the world of renting a property and you need to know about it, because it matters to you as investors probably matters more to the tenants but it’s just important to think about this and how it’s going to play out over the years cozy just did a big deal with the National Association of Realtors. There are other companies doing big deals to work on this type of stuff. And the concept used to be and still is largely where when a tenant because remember, we’ve got to understand their experience have the tenant experience, not just our own experiences the landlord when the tenant goes to look at different properties, and they see one that they like to rent, they fill out an application with that individual owner, and they pay them an application fee, you know, that will cover the cost of the credit report plus, frankly, make the owner a lot of money. Usually a lot of owners make a bunch of money screening tenants, frankly,

Expert Panel with Fernando and Oliver 46:33
that’s how close he makes money. Yes, because their collection is free, but they make money on the report.

Jason Hartman 46:37
Yeah. And on the float how much they charge for the reports for the tenant. You know,

Expert Panel with Fernando and Oliver 46:40
I think it was like 35, maybe $50.

Jason Hartman 46:42
That’s pretty, pretty cheap, frankly, compared to some they charge 250 it’s absurd and yeah, really kind of ridiculous. One of the sea changes that’s happening is instead of tenants applying for individual properties, they now go to one centralized place like cozy and they create a tenant profile and I I did this myself as a tenant on Zillow, where I basically went in fill out a profile put in, you know, here’s my income. Here’s my whole scenario. And then if I get these alerts for properties, I, it just says, send, you know, send your report to the manager or the landlord or the owner, right? And I just click a button, and they get my report. And they call me right back because I say this looks like a pretty great tenant. Thank you. And, and so that’s the way it really should be. So what does this mean to us? Well, we don’t know yet, frankly. But one of the predictions I would make is that this is becoming a much more fluid liquid frictionless market with landlord tenant relationship. That means that it will be easier for tenants to search for new properties and find new properties. And that’s the same way with things like jobs. In the old days, people’s resumes weren’t perpetually online, but now they are with LinkedIn. Everybody’s always available for job. And if you’re married, everybody’s always available for an affair on Ashley Madison. Okay, you know, it’s like, no one ever. The deal is never solid anymore. It’s kind of a terrible thing, in a way, right? So it’s much more fluid and dynamic. And that’s what’s gonna happen with tenants. I think it’s gonna be a lot easier for them to shop. Oh, yeah. And that’s going to work for us sometimes and against us. Other times. Yeah. But certainly, if we want it to work for us, we have to be using the modern technology, because that’s where the tenants will find us. versus if they’ve got to go, they call up about a property, and they see an ad on Craigslist or something. And, you know, they say, well come by, take a look, fill out an application pay me an application fee versus ours. They’ve just done a cozy profile and we’re using cozy and they can just easily apply to us, right? We make it easier for the tenant, make it easy for our customers to do business with

Expert Panel with Fernando and Oliver 48:56
us and even viewing properties. I mean, did you talk to a renter Yeah, on your podcasts or no? Yeah, I’m pretty sure that the ones with the lockbox where you can get a real credit card.

Jason Hartman 49:05
That’s the one where I sent you that I think I sent you a voxer message from the IMF conference.

Expert Panel with Fernando and Oliver 49:09
Yeah, that’s better. Yeah. Yeah. So we are using rampy in one property in Austin. And

Jason Hartman 49:16
actually, wait, do you hear this? This is awesome. Okay, explain to them how it works. It’s so awesome. It’s an amazing time to be alive.

Expert Panel with Fernando and Oliver 49:23
So really rent Lee essentially puts lockboxes into homes, and you have access to the home by providing your credit card information. As a tenant, you can view the home on your own. You don’t need a property manager. You know, you just sign up online and you can go and check out if you like the property or not, you know who was there because they have to give their credit card in order to to get there. And it’s very convenient to get these reports that come online and you can, you know, see what the activity is. You can see if you’re showings are going well. It’s a very interesting model. The piece I think that Remley still needs to work on is the the boxes can be placed in the home, but they don’t physically deliver the boxes to where you have right properties.

Jason Hartman 50:17
So you can’t really do it yourself. You could use TaskRabbit

Expert Panel with Fernando and Oliver 50:21
TaskRabbit. Or you can use a tenant the previous tenant so that’s why we should write is this Can you put this lockbox there?

Jason Hartman 50:29
And what do you ship it to them? Do you have them in your house? Or do you ship it directly from currently

Expert Panel with Fernando and Oliver 50:33
at least sends it to them?

Jason Hartman 50:35
Isn’t? Isn’t this amazing? Do you see how empowered you are nowadays? I mean, once you have that, folks, are you awake? You shouldn’t be amazed by this. Do you know how difficult it was to do all this stuff before? You need more logistics that

Expert Panel with Fernando and Oliver 50:51
you could just couldn’t do it? Yeah. Have

Jason Hartman 50:53
you had enough Coffee? Coffee is a superfood.

Expert Panel with Fernando and Oliver 50:57

Expert Panel with Fernando and Oliver 50:57
this coffee is great because it’s

Jason Hartman 50:59
this coffee is fresh. Good here usually hotel. Actually like this coffee pretty well,

Expert Panel with Fernando and Oliver 51:04
usually it sucks. But But the key thing so if you’re right this is awesome because once you have a lockbox

Expert Panel with Fernando and Oliver 51:10
that is controlled remotely, you can have people that contractors go out there and do avails on your property or do make readies or move out or move ins, you now have control. And that’s what the like the property managers that that’s where I had the argument with that guy in Atlanta is that he does a lot of changing. Yeah, you know, it’s it’s not that hard to put a lockbox and the control here, you know, via a mobile or mobile device. It’s

Expert Panel with Fernando and Oliver 51:40
just to give you an example for that as to how easy it can be. We had a we had a completely remodel, we had to take some carpet out and put laminate floors. And we actually had the entire job done without a tenant or anyone actually being present at the house. We coordinated everything via Email. So there’s

Jason Hartman 52:01
no, no property manager, nobody to let them in just thing.

Expert Panel with Fernando and Oliver 52:06
amazed. It was absolutely, um, it was unbelievable the first time we’ve really done that seamlessly. And you know, the the person that was there just called me up, took pictures of the place and have the job done. Also, you know, before and after pictures, it was quite easy. Ultimately, I think what we’re all getting to here is there are so many different mediums out there to really self manage, and it can be quite easy no matter where you are in the world. Up in the Canadian, Arctic or down over here in California, Canada. We do have internet up there. We actually do, yes. But ultimately I, you know, get into yes back to some of this is that you really can do it. For some of you that are getting into this for the first time. self management is not really something I would recommend. That’s my personal recommendation. I would definitely suggests getting in getting a property management lease for the first year maybe to seeing how it’s really done, seeing what type of expenses typically come up with your property. And then if you decide to take the plunge, go forward and try it out with one property, and then add on more as you feel more comfortable.

Expert Panel with Fernando and Oliver 53:16
Yeah, I second that I did not start with self management. I thought it was much it would be much easier to just learn first with the existing provider. So when you you guys purchase a property in there’s a provider of property management that comes along with the provider, it’s probably a good idea to start out with those. And you can always change property managers. I’ve done that over the years in self management and in different property and

Jason Hartman 53:42
you haven’t been that many years in this. You’re four years in right four years. Yeah, over the years. He says you got a lot of properties so it’s like dog years.

Expert Panel with Fernando and Oliver 53:56
mistakes you make in the video, the

Jason Hartman 53:58
more they are doggy which is a great Point, fail fast. Don’t be afraid to fail, but fail forward and just learn from it quick. So when you have these experiences, like if you’re newer and you’re not into this self management idea and you think we’re crazy up here, right? Which we might be crazy, okay? It’s not perfect. There are some real pitfalls that can happen with self management to assume that the experience you have with your property manager is them, teaching you to be a manager. Okay, view it like that. They are your free tutor. You know, you’re paying them to be your manager, but you’re going to learn about property management.


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